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European Global Navigation Satellite System

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.