I beg to move,
That this House
takes note of European Union document number 7828/07 and ADD 1, Commission Communication, GALILEO at a cross-road—the implementation of the European GNSS programmes;
and endorses the Government's approach to discussions on this document.
The Government welcome the opportunity for a full discussion on the Galileo programme. I thank the European Scrutiny Committee, and especially my hon. Friend Michael Connarty, for its work on scrutinising the project. There is no doubt that the programme is at a turning point. Negotiations with the merged consortium bidding for a public-private partnership concession have been ended. In October, the Transport Council and ECOFIN are likely to be asked to make a decision on the future direction of the programme. The Government intend that that decision should be based on a full assessment of all relevant factors, including the identification of the available options, their costs and risks, and the programme's affordability.
I am grateful to the Minister for giving way at such an early stage in her speech. Like her, I think that the debate is important. However, the full detail of the Commission's position will probably not become apparent until September and the Council will take place in October. What opportunity will the House have to consider and debate the Commission's full position before the Council?
Obviously, there are opportunities for debate in the House. We are more than happy to keep hon. Members informed of the points that the Government are making to the Commission about the UK's position. My hon. Friend Dr. Ladyman has always been open and clear about the Government's position, and the European Scrutiny Committee's work is continuing.
Galileo is considered to be a key Community project. There is a strong will in many member states and Community institutions to make it happen. We share the belief that Galileo could offer real benefits, not least by giving the UK and European industries the opportunity to develop new commercial applications.
I am grateful for being allowed to intervene at this early stage. Just to follow on from the point made by Mr. Carmichael, is it not the case that the Commission's financial plans must return to the European Parliament as part of a process of co-decision? In conjunction with the scrutiny that the European Scrutiny Committee might offer, is that not a further safeguard to keep tabs on the project's finances?
I thank my right hon. Friend for coming to the House to make a full statement, and for ensuring debate on the issue. How much money have the Government put into the Galileo project?
The finances to date come under the financial perspectives headings, in which the figures are not individually set out, but I assure my right hon. Friend that we are keeping a close eye on the future financial perspectives that have been put in place. As regards increased expenditure, we have made it clear that the UK has a strong position on making sure that the project is value for money.
I am grateful to the Minister for giving way; she has been very generous so far, but she may not appreciate my question. I cannot believe that she can come to a debate of such importance without knowing how much has been spent on the project. That is almost a scandal. We must understand where the money has come from and how much will be spent in the long term. However, the biggest question that the House must answer is why on earth we are devoting so much money to the project, when there already exists a very decent system run by the Americans. Why are we going ahead with it when something that is free already exists?
I hope that as we work through the debate, the hon. Gentleman will be able to put aside some of his clear prejudice and consider the benefits. I completely understand where he is coming from, but we need to consider the wider issues, and the ways in which it can benefit British and European industry if we make sure that we have a strategic system in place. Perhaps he should think about the points made about the possible benefits. There is also strong reassurance in the fact that the Government are keen to make sure that the project is value for money, particularly considering the problems that there have been so far, which I will address. As regards the commitment so far, we are talking about approximately €142 million. However, I will set out where will go from here.
I am grateful to the Minister for giving way. On that very point, may I give her one example of an important benefit? The aviation business increasingly depends on global positioning system technology, but there is no redundancy. We have no alternative method of positioning, using satellites, so if the system goes down—and it can—it will create a grave danger to aviation. Leaving aside the issue of costs, which is obviously important, does she agree that the principle of ensuring redundancy in such an essential navigation system must surely be right?
As I have said, Galileo is considered a key Community project, but we are clear that it cannot be carried out at any price; it has to be affordable, and it has to be value for money. It needs better governance and risk management, open competition and a firm focus on the opportunities for getting the private sector to share the costs and risks. We must also look out for opportunities for generating revenue.
From the very beginning of the project, our aim has been constructive: we want to work with our partners and the European Commission to ensure that Galileo can achieve its potential. The Government's priority objectives are private sector involvement through a robust public-private partnership, a civil programme under civil control, and a transparent process of development and financial control to deliver value for money. We are set to achieve that. Our commitment to those objectives is therefore unchanged. In particular, our position on a PPP solution has been consistent and pragmatic. The advantages of bringing in private finance in major projects, in terms of better project management, cost control and risk management, are well known. They have been recognised in EU decisions on the trans-European networks programme, and in the fourth Space Council resolution as recently as May this year. With the ending of the negotiations, the June Council resolution—that more evidence was needed before a decision on the way forward—was the right outcome.
Before I go further, I would like to pay tribute to my immediate predecessor, my hon. Friend the Member for South Thanet, who argued strongly for these outcomes. It was he who secured the presidency's agreement that we should not proceed with Galileo unless the costs were justifiable, and also an acknowledgement that the Council should not rule out the involvement of private finance.
The project has commercial applications in the same way as GPS has commercial applications. It is important to recognise that those are increasing. As someone who has a GPS navigation system in her car, I think we would be facing in the wrong direction if we did not recognise that there are advantages in some of those new technological developments. We have to consider carefully how we apply them in the commercial sector. That was one of the points that my hon. Friend the Member for South Thanet raised—that we need the Commission to look closely at what the commercial interest in the system would be.
Does my right hon. Friend rejoice, as I do, that the European Transport Council pressed the European Commission to abandon the potential public-private partnership? Does she recognise the figure of the senior account manager at Surrey Satellite Technology, who predicted that over a 20-year period the running costs of the system will be around €10 billion? What proportion of that cost will fall on the United Kingdom?
My hon. Friend is right to say that we must consider these matters carefully. That is why it was important at the June Council to get agreement to ensure that the Commission is examining all these issues carefully. The Government are making sure that they are closely involved in asking questions about the future costs, including on-going development costs.
Does my right hon. Friend agree that it is much more important that the investment, which was €10 billion, if it is successful, would, according to the analysis coming before our Committee from the Commission, allow such a system to participate in a market of €450 billion, which it has estimated will be available for satellite navigation systems up to 2025? For a €10 billion investment, a €450 billion market is worth investing in.
My hon. Friend is right. I am the first to recognise that at this stage he knows a lot more than I do about all the details of the project. I know that he has looked closely at all those costings.
I thank the Minister for giving way and welcome her to her new position. The fundamental problem is not the PPP, but the funding stream. The commercial applications do not really matter; the question is whether anyone is actually prepared to pay. During my period and that of my hon. Friend Dr. Ladyman, the Commission evaded the crucial issue of who will pay. Why would people pay for a service—GPS—that they can get for free? Unless we resolve that question, all the other problems will keep coming back.
My right hon. Friend is right to say that we should examine cost implications, funding streams and income. As I have said, my hon. Friend the Member for South Thanet made those points very strongly at the June Council. Those points accord with the European Scrutiny Committee's assessment of the communication from the Commission that was before the Council. Like the Transport Committee in 2004, the ESC questioned the Commission's evidence, recommending that it should produce a fully substantiated case for continuing with Galileo, whether by public procurement or PPP, including governance, finances, the total cost, the level of risk, the sources of private sector revenue and the sources of funding from the Community budget. In our minutes statement at the June Council, which was produced jointly with the Netherlands, we asked for exactly that—a cost-benefit comparison on the same basis between a PPP and a public procurement of the system, followed by an operating concession. Our aim now is to work with the Commission and our partners to build a wider consensus on the detailed issues that must be clarified before October.
It may help the House if I mention some of the issues now. First, on cost and timelines, the evidence of the programme to date—the publicly funded development phase of Galileo and EGNOS, the European geostationary navigation overlay service augmentation system—shows significant cost and timetable overruns. We will continue to argue for sound cost estimates and prudent project timelines that take account of the risks inherent in any project of this size and complexity.
Secondly, on affordability, the Commission's communication accepted that more money will be needed than has been earmarked in the budget. Much of that amount, €1.1 billion, could be swallowed up in cost overruns for the development phase and EGNOS. In line with sound financial management, the UK will resist any reopening of the European budget headings. We will also argue for consideration of whether the system might be phased or re-scoped to what is affordable. Next week, the Government will continue to push for clarity on the financing at the ECOFIN council. We will reaffirm our commitment to funding the programme within the existing ceilings of the 2007 to 2013 financial perspective, and we will put that message across very firmly on finance as well as transport networks.
Thirdly, the communication did not include a substantive consideration of risk. However, the design and market risks identified during the PPP negotiations, some of which are substantial, will not change and could increase. Pressure to build the system quickly could be a factor in increasing the risks. We will therefore push for an assessment of all the risks that the project may face.
Fourthly, lack of effective competition was one of the major problems that affected the concession negotiations. We welcome the emphasis on competition in the Council resolution and will continue to argue strongly for open procurement.
Fifthly, public sector governance needs to be improved. There must be transparency for EU member states and compliance with EU principles. In the continuing debate, the UK will also maintain the position agreed by the Council, the Commission and the European Parliament—that Galileo is a civil programme under civil control. Our firm commitment is that Galileo cannot be used for dedicated military purposes. It is a civil programme under civil control. The December 2004 Transport Council conclusions made it clear that changing the civil status of Galileo would require a decision under the terms of the common foreign and security policy. That decision making is by unanimity and remains so.
The right hon. Lady says that the Government are giving the assurance that this will not be for dedicated military use. Why does she put the word "dedicated" in front of "military use"? Why does not she just say that it will not be used for military purposes, end of story—or is this meant to be a covertly joint defence programme?
Of course some military forces might use Galileo for purposes such as transport logistics; that is why I put it like that. Among our European partners, some organisations such as the coastguard and border police, for whom Galileo may be useful, are technically under military control. However, we should not look to such organisations or to any other Government users to provide the bulk of Galileo revenues.
The Government are equally firmly opposed to any suggestion that the Commission should mandate the use of Galileo charged services in EU regulation. If Galileo is to be a successful project, we should encourage the private sector to look for commercial, not governmental uses. Governments will certainly also then use the services if they are cost-effective.
That is exactly the question that we have given back to the Commission. As the hon. Gentleman will know, in the first consortium that was put together there were sources of private sector revenue. We want to ensure that we are considering all the commercial aspects. It would not be right for me to prejudge that.
One of the Galileo successes so far is the test satellite built in Guildford and delivered on time and to budget, which has successfully transmitted all the operational Galileo signals. That is a real success, and it should be one of the lessons learned from the project. It was delivered by a small company, Surrey Satellite Technology Ltd., a high-tech spin off from Surrey university. If Galileo is to work for the Community, we need more successes like that across Europe. Unfortunately, for a majority of our European partners, the failure of flawed negotiations has tainted the idea of a public-private partnership. In that context, there is a risk that people tend to fall back on what they know—in this case, public procurement—as the safe option. By doing so, frankly, they ignore the facts. As my hon. Friend the Member for South Thanet said at the June Council, if the private sector is not willing to face the risks of the project, what makes us think that the public sector can handle them? The risks—cutting edge design, uncertainty of revenues, cost and timetable overruns, and the industrial rivalries which have caused significant delays—do not change.
The Government are therefore committed to defending the principles which we believe are essential for a successful project. We will continue to argue for a robust approach and to widen the support for that among transport and finance colleagues in Europe. If, nevertheless, the PPP approach is abandoned by consensus, and if the alternative is affordable in the view of the budget authorities, we will continue to work for clarity in governance, open competition and value for money, in line with our commitments to this House. I commend the motion to the House.
I congratulate Ms Winterton on her new appointment. As much as I would have looked forward to future exchanges, this is sadly to be but a brief encounter because I, too, am off to pastures new. It is a pleasure to have one chance, but perhaps the Minister will not be thrilled to hear that I believe that she has given a rosy account of proceedings so far.
Let me set out the background. Satellite navigation could lead to a global market of up to £15 billion by 2010. The United States Navstar global positioning system is easily the largest provider of the navigation signal, which some people still believe to be a military system. It became operational in 1995. In 1996, President Clinton handed control of it to an intra-agency executive. In May 2002, the full signal was made available to users worldwide, and it was—and is—free. In 2004, President Bush replaced the executive board with an executive committee and, from that date, it was no longer used as a military system, but military and civilian authorities manage it equally. Long before all that happened, the European Space Agency and the member states of the European Union became aware of the potential of satellite navigation. They argued that Navstar was not reliable because it was controlled by the military and could be shut down at any time.
Does my hon. Friend recall that one of the reasons why we won the Falklands war was that we had access to the American navigation systems in space? That was crucial—and there was a huge argument about it in the United States—but, as usual and, as in 1939, the Americans came to our aid and we won.
I am grateful to my hon. Friend and neighbour for making that point. He is right to stress the significance of American help and I will tackle that further in my remarks. It is inconceivable that the GPS could be turned off, but I shall say more about that shortly.
After outline approval at the Nice European Council in December 2000, the ESA, in partnership with the European Commission, made plans to match the US GPS. Crucially, unlike the US system, it was to be completely under civilian control and, also unlike the US system, which enjoyed taxpayer funding, its deployment and operation was to be financed by a public-private partnership, with the private sector bearing two thirds of the costs.
Unfortunately, although the Galileo project was intended to be Europe's satellite navigation system, it also became, in the manner of so many European projects, a virility symbol, which was intended to demonstrate the success of European economic and political integration. Mrs. Loyola de Palacio, then Vice-president of the Commission with responsibility for transport and energy, declared at the inception of the development stage of Galileo on
"Europe has finally taken the political decision to launch this strategic programme. Today we are seeing the creative side of Europe... It will help Europe to maintain its autonomy, its sovereignty, its technological capacity and control of its knowledge."
Five years later, Galileo is at what the European Commission coyly calls a cross-road. More accurately, it is in crisis, which arises from the complete failure of the plan for financing the scheme and the time scale for deployment. On the basis of a study by PricewaterhouseCoopers, the Commission claimed:
"Considerable economic benefits should be generated by Galileo."
It also claimed that the project would cost €3.6 billion to complete and that, assuming a "worst case scenario", total benefits would be €17.8 billion. On that understanding, in 2002 the then Prime Minister—the current steward of the Chiltern hundreds—personally approved the scheme at the Barcelona European Council on 13 and
"will definitely become operational in 2008".
A mere three years later, the Commission admits to a date of 2012, and some industry sources suggest that it could be 2014. Although 30 satellites are planned, the only tangible achievement is a single test satellite, Giove-A because the second, Giove-B, has been short-circuiting and will possibly not be launched until December.
As for future costs, an unpublished Commission report now admits that, against the original estimate of €3.4 billion for deployment, plus an additional €5.3 billion for operation and maintenance—a maximum of €8.7 billion—the system will now cost €9 billion to €12 billion up to 2030. The best-case scenario for revenue becomes €8 billion to €10 billion, or less if the more accurate US GPS III offers high-level services free of charge. From a projected profit of €17.8 billion, the maximum is now €1 billion, with a possible loss of €4 billion.
"no more public money would be needed after 2007".
So desperate is it that the venture should continue that it offers two main options: that the funding should come either through the ESA or, preferably, through the Community budget. Additionally, in its February communication, it also proposed a new stealth tax—incredibly, a levy on GPS receivers, most of which are designed to receive a signal provided free of charge by the US.
In the manner of a child commenting on Lord Randolph Churchill, we must ask what Galileo is for. Ostensibly, it is to provide navigation services, not only for people who live in Europe, but worldwide. As was said, the US Navstar GPS system is currently available free of charge to every user, while coming along is the Russian GLONASS and Chinese Beidou compass system, both of which will also be free of charge.
Arguing against cancellation, some advocates will say that Galileo offers greater accuracy and a guarantee of a service not offered by other systems. Galileo's high level of accuracy, however, applies only to the subscription services. There will be no significant difference in the publicly accessible signal, which at the moment is deemed perfectly sufficient for any number of commercial or Government systems. Last year, for example, I visited Berlin and saw the Satellic road-pricing scheme in action, which tracks and charges every single truck over 12 tonnes on German autobahns. Only GPS is used. When I asked about Galileo, the answer was quite clear: they said that if it comes along, they might use it, but they are under no pressure, as they have GPS and their system works. That scheme has been a huge success, pulling in about €250 million a month.
Last week, I had meetings with representatives of Trafficmaster plc, a highly successful company selling navigation services to more than 100,000 vehicles in the UK. Its technical director, Christopher Barnes, said that
"the free to air GPS service is sufficient for vehicle navigation and therefore we are unlikely to be interested in paying (either voluntarily or through a compulsory tax) to use a European service, even if technically it would be better."
There is extremely limited application for the higher accuracy that Galileo will offer and, in any event, any such advantage will last only until the US deploys Block III Navstar, which promises equivalence.
Will my hon. Friend deal with the suggestion made by Lembit Öpik that we somehow need to build extra redundancy into global satellite positioning systems, otherwise our civil aviation industry will be severely at risk? Does my hon. Friend agree that every airline pilot in the world has been trained to navigate his or her aircraft without global positioning, making this redundancy completely unnecessary?
I agree that airline pilots can navigate, but I would stress the huge importance of maintaining the accuracy of GPS. To provide an example, there was a very slight glitch in one of the GPS satellites a short time ago when one of the timers went wrong. The result was that 10 per cent. of mobile phones on the west coast of the US went down. It is thus enormously important for the United States to keep GPS accurate. The economic consequences are huge, as I shall explain in more detail later.
By way of illustration to the hon. Gentleman, does he recognise that many of the smaller aerodromes do not have navigation aids to enable a precision approach, so the only way to achieve that on those smaller fields is by using GPS? My point was that in those circumstances, without redundancy—and especially in bad weather—there is a serious risk to the pilot of an accident.
The answer to that question posed by my parliamentary neighbour from Montgomeryshire is that we have GPS now and it will be enhanced by Block III. The answer is to use the European geostationary navigation overlay service and to get them integrated.
Fears about continuity of service are totally bogus. The President of the US said in December 2004 that providing uninterrupted access to the system and the provision of services on a continuous, worldwide basis for civil use, free of direct user fees for civil, commercial, and scientific uses was their clear policy. The US is also committed to providing GPS to NATO—a point on which my hon. Friend Mr. Cash touched—where it is used not only for navigation but for command and control systems, weapons delivery and, crucially, for the prevention of friendly fire. That is the so-called blue-force tracker system.
So central are satellite navigation systems to the military that, during the height of the Iraq war in 2004, the United States did not close down the system in the region even after it found out that Iraqi forces were using it against the US. Additionally, the Federal Aviation Service approves Navstar as a navigational device in aircraft and, as can readily be seen from the 2001 federal radio-navigation plan, continuity of service is a key element in the provision of the service, without which the system simply could not be approved.
As I thought that some of these questions might come up in the debate, I spoke yesterday to Brigadier General Simon P. Worden USAF, retired, who was responsible for bringing GPS to fruition in 1995. He is now the director of NASA's Ames research centre. Speaking to me in a private capacity, on his own account, he said:
"There is no part of the US economy that does not depend on the continuity of GPS. Any loss of service would have a devastating impact on the US economy."
According to him, nor could Europe ever be deprived of signals. He went on:
"So many European systems are integrated with US systems that they would all go down if Europe was jammed."
Where does that leave us? We have a system that offers no advantages whatever over what is freely available elsewhere, yet we are being asked to consider funding to the tune of several billions for what is essentially a European Union vanity project. We are not alone in having reservations. After the conclusion of the Transport Council in Luxembourg on
"I don't see a strategic case for it. One of the questions we have never asked is how to make a return from this system."
He added that the UK would seek cancellation if concerns were not answered. In parliamentary replies to me, he has said that the Government have admitted to spending €142 million on the project through the European Space Agency and, through contributions to the EU budget, approximately 17 per cent. of the estimated €790 million that the Commission has invested in the programme. That amounts to €276 million in the past three years. The Government have also added that there is not an identified UK contribution to the design and development phase of the programme via the EU budget. To continue the negotiations on additional funding would be tantamount to signing a blank cheque.
Therefore, we have to say that we are not content with the Government's approach to discussions on the Commission document. Although the hon. Member for South Thanet was prepared to countenance cancellation of the project outside the Council chamber, it appears that he did not do so inside it. There is, however, a practical alternative, which the hon. Gentleman did not offer to his European colleagues but which he should have pressed. Preceding the development of Galileo is the European geostationary navigation overlay service—EGNOS.
It was not my intention to intervene on this debate, but I will not have the hon. Gentleman misrepresent me. I made it very clear inside the Council of Ministers that cancellation had to be a real option if we did not get the answers that we were seeking from the Commission. He should not misrepresent the British Government's position. It was stated very clearly.
The debate is whether we are happy with the Government's negotiating stance. They have left us with two forms of public funding, either through community funds or through the European Space Agency. I would have liked EGNOS to be promoted. It is a satellite-based system that will augment Navstar and GLONASS, making them suitable for safety-critical applications such as flying aircraft or navigating ships through narrow channels. Properly integrated with Navstar GPS beyond 2008, that would provide for all Europe's needs. The UK has already paid its contribution of €35 million towards it. It would be a short cut to playing a key role in a global system.
I thank my hon. Friend for giving way on the question raised by the former Minister. In the discussions that Dr. Ladyman described in the correspondence to the European Scrutiny Committee, he said that
So irrespective of anything that he might or might not have said, and irrespective of whether we like it, the fact is that, under the majority voting system, this thing is moving inexorably ahead because the Government, in their vainglorious fashion, happen to believe that they can chuck away taxpayers' money to the tune of billions of pounds without anybody blinking an eyelid.
I am most grateful for the mild manner in which my hon. Friend and neighbour made his point. I agree with much of what he says. There is a much cheaper, practical alternative which would give Europe a comprehensive system that is accurate down to a metre. That would involve amalgamating EGNOS with Navstar.
The Government should have made it absolutely clear in negotiations in the European Council that any further state funding through the European Space Agency or the Community budget would be unacceptable. Our proposal would ensure that Europe had the highest-quality coverage with minimum further investment by the taxpayer. Instead of funding vanity projects, the EU should work closely with the United States to provide a fully integrated global system. That is a real test for the new Government. First, the Prime Minister must negotiate carefully at the intergovernmental conference, as his predecessor approved an EU space policy in the draft mandate from the European Council that will enable the Commission to fund Galileo from its own budget. Secondly, this is a real test of the new Prime Minister's attitude to open-ended public spending projects. The Government should have demanded the integration of EGNOS and GPS, creating a fully integrated global system, and said a firm "no" to further public expenditure on Galileo. As that has not been the Government's policy so far, I urge my colleagues to vote against the motion.
I am saddened by the Opposition's tone, particularly as they have forgotten that the Government's position—and this is even accepted within the Commission—is that nothing that happens in Galileo should be outwith the financial perspectives. The 2013 financial perspectives are agreed—they will be maintained—and no one is giving them away.
Sadly, I suddenly see in the Opposition a complete lack of ambition. They called the initiative a vanity project, but one of the Government's prime decisions was to argue for small and medium-sized enterprises in Europe to be fully and openly involved in the development of anything to do with space policy or Galileo. The Opposition wish to stop that ambition, and they do not have any vision to offer Europe in the technological field at all. Instead, they will rely on GPS from America and hope that it will remain free, or they would rely on Russia, because its service will be free, or even China, which will also provide a free service. They do not, however, have the ambition to operate an independent system —[ Interruption. ] I hear an American voice.
May I correct the hon. Gentleman? First, everyone in the House wants to support businesses in viable and successful projects. However, as we have just heard from the Minister, the project is about to go down the pan, so the hon. Gentleman is disingenuous in saying that the Opposition do not support businesses—that is absolutely wrong. There is a free service, but he suggests that we should ignore it and use a commercial one instead and make people pay for it. There is no market for that service; no one will buy it when a free service is available.
It is a well known strategy to operate a loss leader in business. I studied economics, and there comes a time when one wishes to charge a premium for the services that one offers; that is a well known strategy. If others have made the service available, what is to stop them charging for it? That is an extremely good business model and, in future, when things get crowded in the satellite world, some people who provide the service will say that they must charge for it or, presumably, there will be another form of return. Are we suddenly saying that the USA is a free-market provider of services to the world? That is not a model of the American economy that I recognise.
I like the idea of ambition in Europe. I shall discuss the European Scrutiny Committee's reservations, but there is the ambition in Europe to do something that parallels and, let us hope, gets ahead of other projects. As Mr. Paterson said, the Americans know that only with GPS III can they go beyond what Galileo is aiming at, which is why they are trying to get ahead. The drive for technological advance is something that we should applaud. It is the wrong tactic to suggest that ambition is wrong.
If there are questions about financing, they should be discussed by the Select Committee, as I shall outline. Indeed, we have done so, and we have demanded that the meeting of Chancellors at ECOFIN look closely at the question of viability and financing. We do not work on the basis that we lack ambition, but the new prescription from the Conservatives is to be so conservative that they do not wish to see any advances at all.
That is a ludicrous misinterpretation of what I said. I clearly explained a vision of linking EGNOS with GPS and giving Europe the best and most defined service—down to a metre. Let me address the idea that we are against business. I visited Trafficmaster last week; it now employs 300 people. The jobs are downstream in areas such as e-Call rather than to do with the actual creation of the satellite systems. It supplies 100,000 vehicles and its jobs are downstream and have been created on the back of GPS. The entire Satellic system in Germany is also based on GPS, and it is worth €250 million a month.
To underline my point, that system is reliant on GPS provided as a free service by another country. That is an interesting model. I do not envisage it being provided free of charge in future when those who use it have in a sense been captured because they use it. We should think about the Microsoft model if we wish to understand what monopoly means.
What circumstances might lead the United States to corrupt the signal so that users would have to pay for it, given that a free GPS signal is integral to the success of its economy?
Different economic circumstances can arise at any time. No one originally predicted what would happen in terms of Microsoft and the internet. No one thought that bodies would make charges and monopolise the internet to the extent that Microsoft has done—and to the point where the EU has fined it on a number of occasions for abusing its monopoly.
There is much scaremongering. The key question is whether it is a good idea to involve the nations of Europe in a project to get a better satellite system than EGNOS. It is not a vanity project. It is driven by ambition, and there is nothing wrong with ambition. If that ambition is on such a grand scale that the project is not economically viable, there should be some way of constraining it.
Our Committee is not of the opinion that there is a blank cheque for those involved to do whatever they wish. This debate is not founded on the desire to take a serious look at what Europe is attempting to achieve. The project was labelled and attacked as a vanity project, and that debate has not addressed the purpose of Galileo.
Let me raise some serious points. The Committee and its predecessor were concerned that there might have been some pressure on member states irrevocably to move forward in an incremental fashion towards Galileo, without at every turn having a financial check and balance. We were worried that some decisions might be made too hastily and would be insufficiently scrutinised. We were looking for evidence on which to base each stage of the process.
The latest development throws up some fundamental questions. I say that not because we support some of the points that have been made, but because we wish the project to succeed. The Government must pursue certain questions in the meetings that they attend. Is there a full assessment of what Galileo can realistically achieve together with a credible cost-benefit analysis? That is where ECOFIN has a role to play in justifying the project. Is the project likely to become unviable, particularly with the progress being made on GPS III? The extent of that progress has been proposed as a given, but it might not be. GPS III might not be able to achieve what Galileo can achieve. What Galileo and GPS III can achieve should be examined. Might the ECOFIN analysis be that we would be throwing good money after bad?
The hon. Gentleman is a fellow member of the European Scrutiny Committee, and I wish to ask him a question. He is making some percipient points and he advocates costings and a cost-benefit analysis. Does he agree that this matter should be thoroughly investigated not only by means of a cost-benefit analysis by the Court of Auditors, but also in the context of whether there are any irregularities in the manner in which the contracts are put together? In terms of the British contribution, does he think that the matter should go before the Public Accounts Committee, too?
The hon. Gentleman, although he criticises them a great deal, keeps referring to the involvement of European institutions. I would prefer ECOFIN and the Finance Ministers of the various countries to look at this issue, rather than referring it to the Court of Auditors. I hope that that is what they will do.
If, following the analysis, the answer is that the project is to proceed, the Government have said that they will look at it seriously. They are opposed, for example, to "mandating" Galileo charged services. In other words, there is no question of any Government saying, "You will use Galileo, rather than GPS". The decision must be based on preference, but the Governments of Europe might indeed prefer to use Galileo rather than GPS for their own reasons. There needs to be a proper environment in which small and medium-sized enterprises can participate and get some benefit for our economy. Having achieved that, the Government have to look at whether the present public-private partnership negotiations can be restarted. They are firm in their view that the public procurement model should not be used for either the 18-satellite or the 30-satellite proposal. If the project is going to founder, that is the issue it will founder on. This is an issue for the private sector properly to look at.
In the light of those points, our Committee recommends that we support the Government's position, which is that they continue to negotiate, that the financial perspectives are not breached, that any agreement on post-2013 financing be without prejudice to the outcome of future financial perspectives—in other words, that we consider not just 2013, but beyond—that the funding arrangements are agreed by the Finance Ministers in ECOFIN, and that there is sufficient time for national parliamentary scrutiny. In other words, there should be sufficient time for this Parliament to debate any proposed financial outcome.
Those are the important issues. We have raised serious doubts, but we should not knock the proposal down because we want to score points. Once again, Conservative Front Benchers have tried to use an issue such as this to posture on Europe. I am pro-Europe and if Europe can do something better and much more securely in the long run, instead of relying on another nation to provide satellite facilities to Europe and its countries, this Government should be supported in such efforts to assist that. However, they have taken a tough negotiating stance and should be supported for doing so. That is what we are being asked to do tonight, and I hope that Members will vote with the Government if the Opposition push the motion to a vote.
I will not detain the House long. I welcome the Minister to her new position. She comes to the job with a good reputation in other Departments, and I very much hope that she can continue that in the Department for Transport. I am also pleased to see Dr. Ladyman in his place; I have enjoyed working with him since taking up this brief. I understand that he intends to spend more time with his Alfa Romeo. I am sure that I speak for Members in all parts of the House when I wish him well in whatever he does next.
As I said to the Minister during an intervention, for once I am pleased about the timing of a debate such as this, inasmuch as we are scrutinising a subject before the decision is going to be made. Too often in these European debates, we end up examining a measure after the decision has already been taken. All we are able to do is criticise and describe how things might have been. Having said that—the Minister might now be thinking, "Some people are never satisfied"—I fear that, because so much of the detail on the Commission's position is to be made clear in the months to come, the House is unable to have a fully informed debate. I hope that there will be further opportunity for some measure of debate. I appreciate that, as a result of the way in which we organise our business in the House, it is not necessarily going to be possible to have that debate before an October Council. However, be it through the European Scrutiny Committee or some other mechanism, I hope that those who have expressed an interest tonight in this issue can be kept informed before the December Council.
We Liberal Democrats continue to hold the view that the principle behind Galileo remains sound. We hold the strong view that what is needed is needed for reasons of economic and strategic importance. We do not, however, take the view that that can be an open-ended commitment, which is why we think that the real debate here is the one highlighted by the Committee chaired by Mr. Connarty. It states:
"we suggest that there is a prior assertion from the Commission, which the Minister touches on only briefly, which perhaps also needs to be fully tested — that is the case for continuing the Galileo project at all, rather than writing off the sunk cost and letting Europe's industry continue to exploit the existing and developing opportunities available through GPS uses."
That is a point that the hon. Gentleman made a few minutes ago and I entirely concur with it. It is an eminently sensible approach to take. The question essentially for the House is how sustainable is the PPP model for which the Government express such enthusiasm. The true point, which will have to be addressed eventually, is if the PPP model does not look like delivering, what will the Government's position be? Frankly, we cannot answer that question at the moment, because it is a judgment that can be made only once the figures are available. That is why I remain concerned that we are still being asked tonight to buy a pig in a poke.
We concur with the Government's position for now. I cannot go beyond that and I do not think that the Government would be sensible to try to do so. We remain keen to support this, but the sums must add up.
There have been references to the European Scrutiny Committee report this evening, and the hon. Gentleman just mentioned paragraph 2.24 of the 23rd report. Perhaps it would not be a good idea if hon. Members were left with the belief that the Committee had supported the project. The report states that the Committee agrees with the suggestion that
"no final decision on the future of Galileo should be taken until the Commission's ideas on how to carry forward and fund Galileo are fully developed and explained."
In other words, the Committee is making the lukewarm suggestion that perhaps, in due course, it might possibly—in extremely unlikely circumstances—come up with an answer to all this rubbish.
I thought that that was what I had just said. I also thought that that was what the hon. Member for Linlithgow and East Falkirk had said. Mr. Cash made a lengthy intervention, so I trust that he will not have to make any further contribution to the debate. On that basis, I am happy to let matters rest.
I have taken a 10-year interest in this subject, off and on, and I first join others in congratulating the Minister on her new role. This is a baptism of fire. She has walked into the lions' den and I think that I speak for every right hon. and hon. Member when I say that nothing is intended personally against her by the criticisms that we are making of this project.
I also congratulate my hon. Friend Mr. Paterson, who spoke for the Opposition. He has today been appointed shadow Secretary of State for Northern Ireland, which demonstrates that the Conservative party takes seriously the arguments that he makes in this House, including on European matters such as the Galileo project.
If I step back from the immediacy of this debate, I see in this project a microcosm of what is wrong with the Government's overall European policy—an inability to say "no". We know exactly the position of the Department for Transport on this project. Indeed, it was reported a little while ago that the Department for Transport had attempted to secure funding for the project from the Ministry of Defence. The obvious reason for that is that the Department for Transport knows, and we know, but nobody will say so publicly, that it is a covert defence project for the European Union. If we ask any other European country, it will know that the project is part of the European Union defence agenda. That is why the Department for Transport opened negotiations with the MOD, saying, "If this is so important to Her Majesty's Government, surely the MOD should pay for it. It shouldn't come out of the transport budget."
I put the same question to the hon. Gentleman as he put to me. If defence systems currently rely on satellites provided through GPS by the US, and he is adamant that the US will never withdraw that, why should Europe think that it requires anything other than GPS?
I agree totally with the hon. Gentleman. Some countries, however, share the anti-American paranoia—to which, I think, he subscribes—whereby if the signal is not transmitted by a European-owned satellite, it is somehow not decent, proper or reliable. I assure him, however, that the signal that we get from American satellites is extremely reliable for all defence purposes that I can envisage. Some European countries might believe in what they call a bipolar world, in which the EU should somehow become a counterpoint, and a balance against, American power. Under those circumstances, they might be deluding themselves that such an independent capability is vital for strategic purposes.
Mr. Carmichael spoke about the strategic importance of the Galileo project, although he did not explain what that strategic importance was. Clearly, however, he subscribes to the idea that there is something strategic about our having our own European satellite system. However, given that our closest ally on the other side of the Atlantic, whether we are European, British, German or French, is the United States of America, I can see no strategic case for such a satellite system. I can foresee no circumstances in which we would need an alternative system.
In encouraging my hon. Friend in his important argument about the extent to which anti-Americanism lies behind the promotion of this project, may I ask him whether he heard this morning an extremely interesting programme by Justin Webb on the attitudes of the French—including, for example, Hubert Védrine—who are absolutely obsessed with anti-Americanism? The very point that my hon. Friend makes is demonstrated over and again in the attitudes that they adopt. But if we consider the big landscape, which I think he is seeking to paint, we ought to remember that between 1940 and 1945 the Americans did an enormous amount to save Europe, let alone the United Kingdom.
I very much hope that my hon. Friend gets an opportunity to speak in his own time in this debate, because he has such a valuable contribution to make. I should point out that the United States not only helped us win the second world war but guaranteed western European security throughout the cold war, and underpins the new struggle, which the new Prime Minister calls the new cold war, against international terrorism. I repeat to the hon. Member for Linlithgow and East Falkirk that I can foresee no circumstances whatever in which it would be in the national interests of the United States to corrupt the signal or to turn off or start charging for the system that it currently provides to the world for free. Providing that free system is part of the Pax Americana that it dreams of. It is part of its influence in the world. It would be contrary to its national interest to start playing politics with a system of that nature. As has already been explained, to corrupt it for us, it would have to corrupt it for its own businesses and commerce, and of course it would never do such a thing.
My hon. Friend has skilfully kicked away the arguments for the strategic importance of Galileo. Will he now turn his attention to its supposed economic benefits, and will he respond to what the European Commission has proposed, which is that it will create 150,000 jobs Europe wide?
I am always a little sceptical about figures produced by the European Commission on the success of its policies, given that Europe has been far more effective at producing public sector jobs than private sector jobs over the past 10 or 15 years. But if I may just pick up the challenge laid down by my hon. Friend, the key question is where the private sector revenues will come from. If there was any prospect of a secure revenue stream for the project, the private sector would be willing to invest in order to harness that revenue stream. Not only does that revenue stream not exist, but there is no prospect of it coming into existence. The idea that this could be a privately funded project, resting on private capital, charging a privately generated revenue stream to get the satellites into orbit, has now been exposed. The project has been in the public domain for 10 years. The European Commission has been promulgating the idea that somehow the money will appear as a result of the satellites' commercial potential for 10 years. The money will not appear. The revenue stream is not there. There comes a point when the Government must ante-up to their own position, which is that they should oppose the system in principle. It is a waste of money. It will not fly. It is a dud system.
There are many things that the EU could do very well. It could do free trade well. Unfortunately, it does not. It could do lighter regulation. It could do co-operation much better. There are many things that we hope and pray the EU can be reformed to do very much better, but with the best will in the world, it will find it very difficult to provide a global satellite positioning system for free, which is what the Americans provide for us. There is a saying about gift horses and looking them in the mouth. We have a gift horse and we are looking it in the mouth. We do not need to pay for our own gift horse when we have been given this gift by the United States for the world to enjoy. It is not anti-European. I am waiting for the proponents of the system to demonstrate that there is some commercial logic behind it, which is what I was promised in European Standing Committee B. To pay credit to the Government, they did say that they would not go ahead with this unless there was a commercial logic to it. I put it to them that there is no commercial logic to this system.
I want to get back to the crucial opening point that I made, which is that this is a microcosm of what is wrong with the Government's European policy. We all know that the Minister is sitting on the Treasury Bench because the Foreign Office has decided that the Department of Transport must not veto the project.
Ten years ago, the Government could have vetoed the proposal, but as my hon. Friend says, they cannot do so now. Their attitude is, "We must never say no; we must always say 'yes, but'." There comes a point, however, when once the money starts being wasted we should say no, because if all those satellites become airborne, it will be the common agricultural policy of the stars.
It is a pleasure to participate in the debate, but I am saddened to hear that this is one of the first opportunities we have had to debate Galileo, even though the project is now advanced.
I welcome the Minister to her position, although she has been thrown in at the deep end. Her body language when she answered questions made it clear that she is uncomfortable with what she has been given to do. She could not even come up with the costings when I asked how much the entire project would cost. She could not tell us how much has been spent so far, or give the long-term cost of the project. She was asked a straightforward question but she could not give an answer; instead she tried to dance around the idea that it is something the Government actually want, yet the facts show that that is not the case, as my hon. Friends have illustrated.
The proposal comes from the European Scrutiny Committee, which thought that Members would want to debate where matters stood on the Galileo project. Absolutely right, considering how much money has been spent on it. We have been given a vague promise that we will have an opportunity in October to review where things stand.
That is exactly the question I put to the Minister, but I could not get a response. The right hon. Lady has come to a debate on Galileo, yet she cannot tell us how much has been spent so far.
The Galileo system was due to be operational in 2008; that will not happen. It was supposed to be compatible with the GPS system and with GLONASS, the Russian system. Before I go into detail about Galileo I want to talk about those two satellite systems. The American GPS system was created in the 1980s for military purposes and now has 30 satellites in the sky, costing the US Government about $750 million a year. As we have heard, President Clinton opened it to the world in 1966. Michael Connarty says that it might be switched off, but that is madness on two counts.
I am not misrepresenting the hon. Gentleman; if I can make some progress he will understand where I am coming from.
The GPS system is making significant revenue streams for myriad companies, both national and international, not only in America but across Europe and the world as a whole. Were the system to be cut off, it would cause absolute economic chaos. That is the first reason it will not be switched off and the second is that it is part of a NATO operation. The security of this country, Europe and the wider world depend on the satellite system, so there are two profound reasons why it will not be switched off.
There are commercial aspects, too. We heard that even the Minister has a piece of GPS equipment in her ministerial car— [ Interruption. ] It is in her private car. She has one of the TomTom navigation systems that are also used for map-making, land surveying, scientific studies and air traffic control, as well as in clocks and timepieces and for shipping, not to mention their military uses, from missile guidance to transport systems. All are extremely successful and GPS sales average about £20 million a year, with 95 per cent. of the units sold for civilian rather than military use. That is a success story and we should be aware of it. Not only is the equipment efficient; it is reliable, accurate and, as has been said time and again, it is free.
The GLONASS system is a different story. It was completed in 1995, with 24 satellites, but fell into disrepair after the collapse of the Russian economy. Russia is committed to restoring the system but there have been delays in the process. Huge sums of money have had to be thrown at the system to get it back up and working. There are lessons to be learned from both those systems and we need to learn them quickly before the decision in October, which commits us one way or another.
I will quickly summarise where we stand with Galileo. The system was devised in 2002 to rival the GPS system. There were eight companies and five nations involved, but today, as we have heard, the project is floundering. Only one out of 30 satellites is in orbit and that is a test system. The project was supposed to be in operation by next year, but the latest estimate is 2014—if the project goes ahead and we get all the satellites up in orbit. The German Transport Minister recently described the project as in "profound and serious crisis." That crisis is being caused by funding.
The original plan involved 50:50 financing between the EU and the European Space Agency. The UK part of the funding came from the Department of Trade and Industry and the Department for Transport. The private sector was to pay for two thirds. As we have heard, the original cost was €3.2 billion; that is now spiralling towards €10 billion over the next 20 years. I have asked how much has been spent by the British and we have not had an answer.
The original plan involved a public-private partnership, with companies footing much of the bill in the hope of selling satellite navigation services to commercial users. Who is going to buy a satellite service today when there is a free service available? The only organisations that would buy satellite services would be the Government and public sector organisations—to prop up the costly system. Perhaps we can expect to see congestion charging or the military being converted to the system in order to prop up the funding for the entire project.
If we vote on the motion, we will see Labour Members and the Government walking through the Division Lobby, but I do not believe they will fully understand what they are voting for or signing up to. We do not need this system, we cannot afford it and there is no market for it at all. It is a sheer waste of money and, as we have heard today, the project is based on the ridiculous assumption that the US will somehow turn its system off.
I hope that the hon. Gentleman will check Hansard tomorrow and then apologise to me. At no time did I say that there was any possibility of someone turning off the system. I did say that there is a possibility of charges being placed on the system when it suits the US supplier. That would be disruption due to cost. I think that there should be an alternative. If the Russians think that there should be an alternative and the Chinese are developing an alternative, Europe should think about developing an alternative— [ Interruption. ]
As my hon. Friend Mr. Jenkin said from a sedentary position, what is the basis for that assumption? Is it simply a spurious idea that has been introduced to support the system? I have not heard anything substantial about that whatsoever. The Americans have insisted that that will not happen—mostly because it would cause economic chaos, not only in Britain and in Europe, but in America. It simply will not happen. Another reason is our relationship within NATO. We have a free system and we should use it. It has been said again and again, "Why sell Pepsi Cola when you can get Coca-Cola free?"
The European Scrutiny Committee also expressed doubts in its report. It accepted the potential of Galileo to be a key project, but argued that it should not be proceeded with unless the costs were justifiable. The Minister has not justified those costs today. We need a system. There is one that is free and that is the one that we should use. The EU has three options. First, it could set new deadlines for the consortium to raise more funds. Secondly, it could make the project a full public sector operation and foot the bill. Thirdly, it could end the project altogether.
The project shows the ugly, bureaucratic and autocratic side of the EU. The decision on the project stands alongside such bizarre decisions as having two Parliaments for MEPs and having a defence force in the EU the replicates and mimics NATO's. I end where I began: by saying that the Minister came here today unable to give any costs. I urge the House to vote against the motion.
It is not that often that the European Scrutiny Committee ends up having one of its proposals for debate taken on the Floor of the House. I wish that that happened more often. It is evidence of the importance to be attached to the question that this happens to be one of the rare circumstances in which such a debate takes place. This is really the European gravy train mark 1.
We have heard a lot of useful contributions from hon. Members—on both sides of the House, in fairness—expressing concerns about the costs. Michael Connarty made a perfectly reasonable point about the need for a cost-benefit analysis. Indeed, at the heart of the Government's proposals is a severe question mark over the way in which the process is being conducted. As others have pointed out, the abandonment of the PPP element demonstrates in itself the lack of the proposals' viability. However, the problem is that no one can actually stop them.
There will be interminable discussions. As I suggested earlier to the hon. Member for Linlithgow and East Falkirk, the Chairman of our Committee, there might be a reference to the Public Accounts Committee about our contribution. There might be a reference to the Court of Auditors about the amount that has been frittered away. Irregularities may well emerge, and if they do, I hope that there will be a proper investigation. However, will anything stop? It will not, because there is no power to do that, unless the Council of Ministers and the Commission change the position about which the former Minister, Dr. Ladyman, has told us. His most recent letter of only a few weeks ago was quite clear that
Some of us sometimes point out that it is perfectly obvious that there is a Euro-elephant in the House of Commons —[ Laughter. ] I am glad that the Minister has a sense of humour. I had the pleasure of being in opposition to her when she and I had respective Front-Bench positions a few years ago. She knows perfectly well that there is not only a Euro-elephant in the House of Commons, but a pink Euro-elephant—this is a complete fantasy world.
Let us look back at the basis and origin of this. Poor old Galileo was taken to the cleaners by the inquisition for misrepresenting, as it put it, so we could at least admit that he had his feet on the ground, when the inquisition let him do so. However, the Minister, by contrast, is being pushed into outer space on this subject. She is not having a happy christening by being plunged into one of the worst projects that the European Commission has ever put forward. The House of Commons European Scrutiny Committee has recommended that this debate should be held on the Floor of the House and the Government have accepted that. Given the conventions of the House and what goes on behind the scenes, a strong message is being sent out.
I am sure that we will vote against the motion. I presume that the right hon. Lady will troop through the other Lobby, but what a nonsense that will be, given every single thing that has come from Government Members, ranging from the former Minister's letter to the body language of the hon. Member for Linlithgow and East Falkirk. Despite his enthusiasm for all things European, I think that even he has had to reach the conclusion, underneath it all, that this is not a runner. The proposal is hopeless, and it is appalling that a clear majority of member states, in this crazy, zany, irrational fantasy world that they inhabit, could continue to underline the strategic nature of the Galileo programme.
Several hon. Members have gone through the arguments about the extent to which the American system is free. We know that the project before us is not a runner, and we know that there is no way that it can be made into one, so what does the issue represent at bottom? That is the sort of reason why the own-resources decision has not yet been debated in the House, despite the fact that it was endorsed by the previous Prime Minister in December 2005. This is really all about the reduction of the rebate, the intricacies of the budget arrangements, and the impact that they have on our taxpayers' pockets. Hon. Members should be under no illusion on that point.
My hon. Friend Mr. Paterson said that the project was costing, or had so far cost, the British taxpayer €35 million or £35 million; I was not sure which he meant, but whichever way we look at it, the reality is that a huge amount of our taxpayers' money is being subsumed in this absurd project. It is not a laughing matter if we think of it as money that could otherwise be spent on useful and important projects such as hospitals and schools.
To clarify matters for my hon. Friend, I was quoting a reply to Mrs. Dunwoody. The figure of €35 million refers to the cost so far of EGNOS. On a point mentioned by my hon. Friend Mr. Ellwood, I have received a very limited reply from Dr. Ladyman that shows that our country has spent €276 million on Galileo in the past three years alone.
I am grateful to my hon. Friend, as ever, for getting that point out into the open. We are talking about much bigger sums than I had previously thought. We are talking about a failed project; that is clear. There is no way of stopping it, and further vast amounts of money are, no doubt, about to be spent on it, in an attempt to get it right. Almost certainly, there will be massive accountancy failures. It is certain that the European Court of Auditors will point all that out in due course, but that will be after the project has been allowed to continue. The project has no useful purpose whatever. It cannot fly and cannot even be described as a duck. It cannot be described as a workable system. The proposal is completely absurd. This is the first time that the Minister has come before the House in her current role, and I sympathise with her for having to turn up on this occasion. I wish her well for future occasions, because I cannot believe that anyone else has pulled as short a straw as the one that she pulled tonight.
Yes, we should. I can see what Mr. Cameron is up against when trying to make up his mind on what to do about the European People's party, given the contributions made tonight. I am sorry to hear that Mr. Paterson is leaving the transport brief so soon after my arrival, and that we will be losing the moderate voice of the Conservative party to Northern Ireland.
This has been a wide-ranging debate. My hon. Friend Michael Connarty and Mr. Carmichael took a rather more measured, sensible approach to the subject, by contrast with the slightly paranoid approach of the Opposition party. Mr. Cash made some interesting interventions, some of which were so long that I received notes at the Dispatch Box, which normally only happens during a speech. I shall try to address some of the points that have been made, particularly with regard to the UK contribution to the programme. I shall reiterate what I said earlier but perhaps did not make clear enough.
The development programme is jointly funded by the European Commission and the European Space Agency. The UK is contributing about 17 per cent., or €142 million, directly through the European Space Agency. I wanted to get that on the record.
A lot of money comes directly from the European Commission, into which we channel money as well. Is there an additional sum that comes indirectly from the UK via the European Commission?
The test and development phase, as I said—
It being one and a half hours after the commencement of proceedings on the motion, Madam Deputy Speaker put the Question, pursuant to