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Finance Bill

7.53 p.m.

Brought from the Commons endorsed with the certificate of the Speaker that the Bill is a money Bill; read a first time, and to be printed.

7 Jul 1999 : Column 951

Space Policy

7.54 p.m.

Lord Renwick rose to ask Her Majesty's Government what decisions were taken at the Council of Ministers on the European Space Agency on 11th and 12th May; and what were the implications of these decisions for United Kingdom space policy.

The noble Lord said: My Lords, I am delighted to congratulate the Minister on his successful chairmanship at ministerial level of the recent council meeting of the European Space Agency, and to thank him in anticipation for his reply this evening.

Let me say first that I am happy to welcome the outcome of that Brussels summit as being largely beneficial for the UK. Of particular importance to this country are the decisions of the council in the areas of earth observation for environmental monitoring, of global satellite navigation, of satellite systems for multimedia telecommunications services, as well as for furthering the scientific exploration of the earth and our place in the universe.

However, we must also consider some of those areas which are still of concern, and where the Minister may be able to help us to clarify the policy and intentions of Her Majesty's Government. I turn first to the question of the management of the environment in accordance with the many international agreements and protocols, which will depend, among other things, on observations which can only be made by satellite. The UK has world-class capabilities in this area, particularly in space-borne radar systems, and data processing and services. Thus, the strong commitment at the council to the Living Planet programme is important both in national as well as European terms. In putting earth observation science on a steady course, however, Living Planet represents only the first step.

What is now vitally important is for the Government to think innovatively about how to assist the transition to the commercial and operational phase which alone will lead to a robust and self-sustaining earth observation industry in this country. It would be helpful to hear the Minister's views on how that transition is to be managed; and on how he intends to stimulate his government colleagues and the EU in co-ordinating requirements for earth observation data in a more effective manner than heretofore, since this, inevitably, is an operational area where government users predominate.

Those questions apart, the ministerial outcome on earth observation is widely seen as a positive step in the right direction. The same cannot be said, I regret, for what was decided--or rather, not decided--in regard to the Future Launchers Technology Programme. It is with some alarm and disappointment that I note that both the UK and Germany reserved their position on that important project. From a strictly national point of view, I must express grave reservations over any decision which would effectively abandon the chance of a UK role in the next generation of launch vehicles.

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This is a time to move forward and to remember the mistakes of the past. Will the Minister therefore give the House an assurance that, in the review that he is undertaking following the council, he will commit to this programme nationally, and use the considerable influence he has gained from a successful chairmanship to consolidate support from other member states?

It is always rewarding to acknowledge progress, and the role that the UK scientific community has played, and continues to play, is a vital part of an undoubted European success story. In general, the recent ministerial deliberations seem to have underwritten those missions which are central to the objectives of the ESA space science programme. I particularly welcome the assurance that the Mars Express mission will proceed. What though of the British-led Beagle 2 Mars lander? Perhaps the Minister will clarify his intentions on that key component of the Mars Express mission.

On the wider issues of the way in which ESA delivers its space science, the ministerial meeting posed some hard questions for ESA management. That is a good thing, and indeed reflects the success of UK advocacy of efficiency measures during both the present and previous administrations. Nationally, it will mean that the allocation of funding between the European Space Agency and national space programmes will have to be reconsidered. I hope that the Minister will tell us how he intends to proceed so as to ensure that Her Majesty's Government's funding is used most effectively to produce the best scientific results.

Perhaps the most far-reaching decision to be reached at this ministerial meeting, however, was to confirm our commitment to the definition phase of the Galileo programme which will ensure the strategic independence of Europe in the field of satellite navigation. This House will particularly wish to note that the UK is the second largest contributor to this programme. It is essential for the future prosperity and independence of the UK and Europe that this programme proceeds to a successful conclusion. The next generation of navigation services will affect the way we live in the next century and beyond. Galileo, however, is a joint programme between ESA and the EU, and the decision to proceed was very much contingent upon the additional support of the European transport ministers at their meeting last month. My understanding is that such support was forthcoming, but I hope that the Minister can confirm that the significance of the Galileo programme has firmly registered across government.

I mentioned earlier the increasing convergence of the EU and ESA in the future development of an overall policy for European space; perhaps the gradual drawing together to which I referred is beginning to require clearer political oversight. The Minister would assist us greatly, therefore, if he could offer an insight into how he sees European space developing in the next few years, for, to say the very least, it is hard to believe that the European Space Agency will be the same animal in five to 10 years' time as it is now.

In doing so, does the Minister recognise that Britain's role in the European Space Agency is part of a European industrial and political success story which we would do

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well to balance against some of the more negative aspects of the current European debate? It is significant that our own Parliamentary Space Committee, to which I shall turn in a moment, has now joined in the formation of a European Inter-Parliamentary Space Group. I had the privilege of attending the group's inaugural meeting in Paris at the end of April this year when parliamentarians from France, Germany, Italy and the United Kingdom committed themselves to co-operating with their national governments and each other in the promotion of European space interests.

Nevertheless, we must also identify where it is necessary to protect national interests. We can all understand, therefore, why the Minister has postponed publication of his Space Forward Plan in order to take due account of decisions taken in Brussels. However, I wish to express my particular disappointment that the publication of the UK Space Plan 1999 is, I understand, in the perverse way in which governments treat this House and another place, precisely timed to appear after both Houses of Parliament will almost certainly have risen for the Summer Recess. I urge the Minister to share with us, to the maximum extent possible, the likely detail and thinking in this space plan, of which, I understand, the first proof will be considered in the next couple of days.

Perhaps I may take this opportunity of advancing the parliamentary and government dialogue a stage further in my personal capacity. The Minister will be aware of the work of the Parliamentary Space Committee on which I have the honour to serve as honorary secretary. It is typical of the good will and common ground which applies on an all-party basis that that committee, with the strong support of the United Kingdom Industrial Space Committee, has enabled parliamentarians to engage in a dialogue with the Minister and his predecessors and the British National Space Centre.

I pay tribute to the way in which the Minister and the BNSC have responded positively to suggestions put forward during the consultation and dialogue, both in the run-up to the ESA ministerial meeting and in the preparation of the UK Space Plan.

In what may be one of the last opportunities I have in this House to argue for the continuation of a space partnership between government, parliament and industry, may I urge the Minister--particularly when the timing of the publication of the space plan comes so unfortunately in relation to the parliamentary timetable--that he confirms his previous offer to meet the Parliamentary Space Committee and the United Kingdom Industrial Space Committee's representatives as soon as possible after the publication of the plan? Meanwhile, I know that your Lordships' House will await the Minister's response with the keenest interest.

8.4 p.m.

Lord Craig of Radley: My Lords, it is a pleasure to participate in this debate so ably initiated by the noble Lord, Lord Renwick. His interest and expertise in the subject are well known and of long standing. I wish to concentrate in the time available on just one of the important issues which the noble Lord raised. I share

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the view that one of the really long-term questions or decisions for the Government is what is to be our approach to the next generation of launch vehicles, generally seen to be of the re-usable kind or RLVs for short.

As the world leader in the launcher field, it is not surprising that the United States is very active in RLV endeavours. We have benefited greatly from their efforts in the past. Where should we stand today? What are the important factors we must take into account? Let me try to outline a few. I hope that in his reply the Minister will be able to take us further into his and the Government's thinking about RLVs and the approach which Her Majesty's Government are minded to adopt when they publish their long awaited space plan.

It is sobering to recall that in the early post World War II years we were a leading country in research into and development of ballistic missiles. Those of your Lordships with long memories will recall our experiences with Blue Streak and the defence-related efforts devoted to trying to make it work. As so often befalls early pioneers, success does not usually come easily or quickly. More often than not, the test failures along the way are judged by many not only by their lack of success but also by their costs-- costs which are soon represented as unacceptable and irresponsibly exceeding the original ballpark estimates. In short, they amount to financial millstones which must be dealt with.

With competing demands for resources, not only in the defence field but throughout the economy, inevitably alternative approaches have to be studied. In due course and with plenty of rationalisation, usually concentrated on relative costs of the ways forward, one of the alternatives will become the favoured policy, even at the expense of broad political and security judgments of longer lasting benefit.

We abandoned Blue Streak. We chose to look to the United States to provide us with a whole series of ballistic missiles. Noble Lords will recall the Thors, the Skybolts, the Polaris and the Tridents, all of which we obtained or were offered on account of our special relationship with the United States. We soon took responsibility for the payloads and upgrading of the on-board weapon and other systems which these missiles, and others for our communicating and intelligence needs, would or could have been taken into space for us.

With such help in the defence field, it is hardly surprising that we did not seem or need to have to contribute in any major way to the development of the actual launchers. Unlike us, the French have argued that without the nationally owned capability to launch their payloads into space, they would not have a viable or credible space policy. It is interesting to reflect that neither we nor the French could make a case that the particular routes that we have separately chosen have proved to be a financial and strategic mistake for the other. No such major divergence is discernible in the successes of our separate space policies.

We seem in the past 30 to 40 years to have adopted or even drifted into an alternative rationale to that of the French, a rationale which is, at its most basic, that it is

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what is in space and not what you send it into space with that really matters and we must concentrate our resources and efforts upon them.

Certainly, the combination of commercially available launchers and the undoubted value of the special relationship that we have enjoyed with the United States, more so than any other European country, has given us much, if not virtually all, that we could hope to find, and fund, for our space needs. As a consequence, our enthusiasm for the European route has not always been particularly obvious or sincere. The question arises: are we set fair to continue on this path, or is now the moment to reconsider, even modernise, our approach? Should we become more active and a leader in the research and development of future launchers?

The noble Lord, Lord Renwick, concentrated on the global commercial market for RLVs to serve the space communities. I hope that the other aspects of the issue will be given their due weight. The political and defence rationales for the extent and depth of our involvement in future RLVs must be considered. As our links in the EU develop, will we find changes in the bilateral strength of the special UK/US relationship? Will the United States perceive Europe as its dominant interactive partner at the expense of the past special dealings with the United Kingdom?

We see the European Commission adopting a much more prominent stance in space-related activities as a regulator, policymaker, defender of European interests internationally, research funder, and potentially as a customer and advocate of applications and markets. The Commission recommends that Europe constructs a global navigational satellite system to compete with, or complement, the systems deployed by the United States and Russia. These and other such developments are in turn likely to impact directly on the development of a common foreign and security policy in Europe.

In the defence field, the potential threat from ballistic missile attack on this country seems for the moment to be on the back burner. We are told that the Ministry of Defence will keep the situation under review. But in the long run such a threat cannot be wished away, nor can we expect that it will never re-emerge as a pressing and dangerous problem. If we are to develop defence capability against that kind of threat it will require expertise, including launcher expertise and counter- ballistic capabilities.

I believe it is right that political and defence issues, as well as the purely commercial considerations, should be weighed in the assessment of the way forward. Inevitably, the scale of the defence, security and political issues will have a bearing on the amount of government support of R&D which should be forthcoming. Only if the way ahead is confined to civil and commercial considerations is there a real argument for leaving it to the industry alone to fund its own research and development and to seek, in due time, a return on its capital as it sells its products in the global market.

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I have tried, with all due deference, to remind the Minister and his department that, important as the civil and commercial space issues are, their policies should not fail to address the national interests in the wider fields that I have outlined. I hope that the Minister is able to give a firm assurance that the forthcoming UK space plan will be a truly trans-departmental document and that full weight will be accorded to broad issues of key importance to the way ahead for the United Kingdom in space and, in particular, to the area of reusable launch vehicles.

8.13 p.m.

Lord Selsdon: My Lords, with the leave of the House I should like to intervene at this late stage. I wanted to speak in this debate but I had to be in Newcastle today and was not sure whether I could rely on the trains to get me back in time.

I declare an interest that may surprise your Lordships' House. I had a lot of dealings with Eastern Europe and became involved in Ukraine and the idea of joint ventures in ship-building. While in Ukraine on missions with many former defence people I was asked if I would like to see how they launched objects into space. I spent a few days in Dnieper Petrovsk and visited Yushmash, the Ukraine space centre, which was also responsible for building the SS20s, the SS18s and SS17s, for ever and a day. That industrial enterprise, of which President Kutchma had been chief executive for a while, won three Orders of Lenin. One does not get an Order of Lenin unless one launches at the precise micro-second. Therefore, reliability in those days was absolute.

It was one of the most impressive places that I had visited in my life. I shall not bore your Lordships with hours of discussion in case someone believes that I have been got at. I sat down to dinner with a number of people. We could not understand each other. I discovered after a while that I was talking to someone who had been into space. He told me that I knew nothing about Trident and about this and that. I did not. I did not even know that liquid oxygen was used in the launches or that the workers had to be chained so that static could not cause explosions. They reminded me that it was they who had first taken over the German technology. All of this conversation was conducted in a mixture of half-German and a language that I could not understand. It was an impressive place.

When I returned I asked myself a question. I had had some past dealings with our own space involvement. Since we were not part of Ariane, should we not consider developing a joint launch capability? I visited the British National Space Centre, which I did not know existed, near Victoria Station, and found it to be a pretty impressive organisation. Although the people involved had no tools and hardly any resources they had considerable know-how. They explained to me that it was possible to attach devices to the outside of the launch systems developed in the Ukraine and Russia to give them greater thrust, and that they did not pollute the atmosphere since the vapour trail was composed of water. I suggested that we might co-operate and launch a range of joint satellites. We could produce the

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satellites and develop communication systems of our own. We could shoot down those dreaded people we confront from time to time who seem to control not only the airways but also space.

My thought was a very simple one: since Ukraine is part of Europe, could we involve Ukraine in some form of joint venture? I should like to ask the Minister whether Ukraine is regarded as a potential partner in this field. I should like to say more, but I am very grateful to noble Lords for listening to me at this stage.

8.17 p.m.

Baroness Sharp of Guildford: My Lords, I join others in this House in thanking the noble Lord, Lord Renwick, for initiating this important debate on the European Space Agency. It is in effect a sequel to the debate held on 4th May, initiated by the noble Lord, Lord Kennet, on the promotion of satellite technology. On that occasion, we anticipated the ministerial meeting that was to take place on 12th and 13th May in Brussels. We now come together after that meeting to congratulate the Minister on his successful chairmanship and to learn from him, I hope, a little more detail of the outcome of that meeting than can be derived from the general press releases.

In the debate on 4th May, I made clear the general support of these Benches for the more positive role that the Government are playing towards space science and technology in general and the European Space Agency programmes in particular. This is an area where par excellence Britain cannot go it alone and it makes sense to pool resources with others. The European Space Agency has had its ups and downs, and Britain has tended to maintain a somewhat arm's-length relationship with it, participating in the mandatory science and technology research programmes but distancing itself from some of the optional programmes which, as the Minister suggested in the previous debate, sometimes offered national prestige at perhaps disproportionate cost. But the tougher management stance at the European Space Agency over the past five years has brought rewards, and the budget in real terms today is lower than it was five years ago, in spite of the ambitious new projects endorsed at the ministerial meeting. It is a prime example of what can be achieved when Britain is prepared to play its full part in European programmes, to be an active player and therefore in a position to influence and help to shape developments.

From these Benches we were particularly pleased that the ministerial meeting in May approved proposals for the Galileo project to develop Europe's own second-generation satellite navigation system. As other noble Lords have noted, this is to be a joint programme with the European Union, ultimately costing 2.9 billion euros, although current approvals relate only to the definition phase. As well as the European Space Agency, the European Union itself is due to contribute some 750 million euros towards that 2.9 billion euros. I believe that I am right in saying that at the Heads of State meeting in June the go-ahead was given for EU involvement in this project.

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The project is conceived so that approximately half of the 2.9 billion euros will come from private funding via a public/private finance partnership. This is an area where the ultimate gains in commercialisation--ship, aircraft, and in-car navigation systems, for example--are very substantial. Surely, it is argued, we can look to the private sector to put up some of the capital. However, as we have seen with the PFI schemes here in the United Kingdom, it is not always so simple. It means investing long term, and it is not always clear how the costs would be recouped.

I should like to ask the Minister whether there has been any further development of these proposals. Are there likely to be any problems in the public/private finance partnership? Is it really feasible to raise up to 50 per cent of the finance in that way?

The ministerial summit in May also gave the go-ahead to the Living Planet programme of earth observation satellites, which will underpin the programme of research on the earth viewed from outer space. It will provide detailed monitoring of such things as climate change and seismic activity, and will contribute substantially to our understanding of the environment we live in and the management of natural resources.

In addition, the increasing needs of the tele- communications industry were recognised. Some 250 million euros for the period 1999-2001 will go towards the development of informational and multimedia systems. One has only to see the expansion in this country of Internet connections to recognise how important is the provision of this infrastructure.

My second question to the Minister is whether we are moving ahead fast enough in these areas. These new technologies will be so important as a backbone to industry over the next decade that it is vital that we provide adequately for the infrastructure. To date, we have been disproportionately dependent on American technology. Now Europe is developing its own capabilities, but are there dangers that they will be too little and too late?

This brings me to my final question to the Minister. To date, Britain's contributions to the European Space Agency have been mainly to the science programme. Our total contribution to ESA amounts to about £130 million a year, considerably less than that of France, Germany or Italy. Our total spending on civilian space research, as the noble Lord, Lord Kennet, pointed out in his introduction to the debate on 4th May, puts us in 13th place on the global list, below Finland and Austria. If we include military applications, we are seventh. But, as the Minister himself made clear in that debate, this is an area in which civilian applications are now in the lead. Indeed, space science is beginning to come into its own. Commercial markets, largely associated with satellite communications, are burgeoning. In this regard, is the UK spending enough, not just on the underpinning scientific research, but on the development phase, which is vital to the successful commercialisation of technology?

The same point--the need to be supporting technology as well as science--was made by the noble Lord, Lord Renwick, and the noble and gallant Lord,

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Lord Craig of Radley, when they discussed the lack of decision at the ministerial meeting on the Future Launchers Technology Programme and the need for Europe to develop its own interests in reuseable launch vehicles. Britain has, as I said earlier, taken pride in limiting its involvement in such programmes as Ariane 5. Does there, however, come a point when this is no longer sensible; when the shift from science towards commercially viable technology demands more investment in downstream activities? Should Britain be less cautious; be prepared, now that the science is maturing into technology, to increase its investments? More generally, does this apply also to the European Space Agency itself? We have taken pride in the budget restrictions and in keeping its growth well below the level of inflation. But are we now at a point when we need to invest in order adequately to underpin the next generation of technology? Is this an area where Europe ought to be expanding its investments?

I raise those questions because on these Benches we are anxious to see Britain maximising its gains from our investments in science and technology. But there is an old maxim that one cannot reap where one does not sow. Britain has considerable capabilities in these areas, both in academic science and in its real-life application. We are now at the point of rapid commercialisation. Can we really rely on the private sector to fund this process, or should the Government, either singly in the UK or jointly with our European partners, be prepared to increase their investment?

8.25 p.m.

Earl Attlee: My Lords, I am grateful to my noble friend Lord Renwick for introducing his Unstarred Question tonight. We are lucky to have his expertise available, and I hope that he will be attending this House for many years to come.

Bearing in mind the fascination that space engenders in most of the population, it is a little surprising that so few noble Lords felt able to speak tonight. My noble friend and I are therefore grateful for the contributions made by the noble and gallant Lord, Lord Craig of Radley, my noble friend Lord Selsdon and the noble Baroness, Lady Sharp.

The ESA is primarily concerned with the peaceful or civil use of space and is one of Europe's least known industrial and scientific success stories. With comparatively modest expenditure by each participating nation, much has been achieved with an organisation which is still outside the EU.

Perhaps one reason for that is the concentration of effort on unmanned space missions, which can achieve much valuable research without needing extremely high factors of safety for the space vehicles. Manned space flight obviously captures the public's and even Ministers' imagination, and can open purse strings. But is it efficient? I am glad that the council of ministers of the ESA, chaired by the noble Lord the Minister, has not been tempted down that route to any great extent.

When we watch the weather forecast the presenter casually refers to the latest satellite images from space. How far we have come from a radio report received

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from a weather ship out in the Atlantic ocean! The CRYOSAT mission, initiated by Professor Duncan Wingham of University College, London, was referred to by my noble friend Lord Renwick. As part of the Living Planet programme, it will enable the planet to be studied in a way that was not possible before.

The two markets which hold out the strongest prospects for growth are telecoms and satellite navigation systems. They are currently dominated by the US, but the decisions of the council have a strong commercial basis and will address this.

On the telecommunications side, I have always wondered where its development will end. The noble Baroness, Lady Sharp, referred to the huge rise in Internet connections. That will obviously create a requirement for even greater telecommunications capacity. I wonder what is the ultimate limit of the amount of data that can be transmitted by satellite. I am sure that it is right to recognise that the European industry must capture a substantial share of the world telecommunications market. I am pleased that steps have been taken to develop multi-media and information systems.

The Galileo programme will develop a European GPS navigation system that reflects the latest developments in technology and accuracy. I am not sure that the zero option of doing nothing and relying on a US military system would have been a wise move. I have to confess that, despite reading several papers on the subject, I am not sure just how accurate the new system will be. The US system is built for defence and deliberately degraded for civilian use. I have seen the term "millimetric accuracy" used. Can the Minister enlighten me as to what positioning accuracy will be possible with the new system?

I have one slight anxiety about the Galileo system. Some noble Lords will recall the crucial scientific battles over navigation aids for aviation conducted during the last war. A maverick power could now use the GPS system to navigate a missile or weapon precisely to a target in Europe. In the event of the US military detecting certain types of missile attack, I presume that it could instantly extinguish or corrupt its GPS signals. Galileo will be a civil system, but it will be very accurate. Can the Minister reassure me that the necessary agreements will be put in place to meet the threat described but without the risk of premature action?

My noble friend Lord Renwick asked about the status of the Mars Express project and the associated Beagle 2 Mars Lander. It is an interesting concept that will make it possible to analyse samples from the surface of Mars. I fully accept that there is a window of opportunity in 2003 that will make the project more economical. However, I am a little worried that there might be an element of what I might call scientific competition between the ESA and the Americans. I understand that their mission might arrive two years later. I am sure that the Minister and his fellow Ministers on the council are well aware of the need to avoid wasteful duplication of facilities and projects around the world. Can the Minister state the differences between the two programmes' missions?

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The noble and gallant Lord, Lord Craig, my noble friend Lord Renwick and the noble Baroness, Lady Sharp, mentioned the future launcher technology programme. In his interesting contribution, the noble and gallant Lord talked about the difficulties of financing and managing advanced high-risk programmes. He raised important points and I look forward to hearing the Minister's reply as to future policy.

I confess that I have not had time fully to research the decisions made by the Minister and the Council, but as far as I can see they have been made on a sound scientific and commercial basis. There will never be sufficient money for purely scientific research and, by definition, the research opportunities in space are limitless. However, the emphasis is now on commercial and environmental programmes. With the caveat that I have given, we on these Benches welcome the Minister's sterling efforts as chairman of the council of ministers at the ESA and the decisions made.

8.31 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I am very pleased that the noble Lord, Lord Renwick has introduced this debate. After the excellent debate we had on 4th May, I am delighted to have the opportunity to report on what happened at the ministerial council. I believe that the council meeting was a great success and I am pleased that the UK was able to help give a lead in preparing and adapting ESA to meet the new challenges facing European space at the turn of the millennium. This was the first major opportunity to set new directions for the agency since the controversial manned space decisions of 1987.

I met a number of my European ministerial colleagues as part of the process of preparing for the meeting. It was clear from those discussions that there was a large measure of consensus on how ESA should adapt and what the priorities should be. It was equally clear that the consensus was building around themes which were central to UK space policy. Consequently, at Brussels we reached unanimous agreement on setting clear objectives for the agency for the first time. These were: to pursue the highest quality science in astronomy and Earth observation, prioritised through peer review; to partner industry in achieving agreed target shares in commercial space markets; to foster the progressive integration of European technical expertise; and to enhance cost effectiveness, setting performance indicators and reporting measured results against targets. We also successfully called for a joint European space strategy to be prepared by ESA and the European Commission by the end of 2000.

In space policy, the Government have two clear objectives--the pursuit of scientific excellence and the search for commercial success. It is against those objectives that we have tested all the proposals considered at the ministerial council. When we tested manned space against those clear objectives, I have to say that in most cases we felt that it neither provided scientific opportunities nor met commercial objectives.

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I am sure that the noble Earl, Lord Attlee, was right to say that manned space projects capture the imagination of the general public, but they are not a sensible way to pursue most scientific and commercial objectives. The noble Baroness, Lady Sharp, raised a point about the total investment in space, but our investment in space has to be set against other programmes to support innovation in industry. We have got the balance about right on the industrial side, although space provides huge opportunities for increased scientific work.

There were two main examples of the theme of commercial opportunities that we supported at the ministerial council--telecommunications and navigation. Two important telecommunications programmes were agreed, providing support for development of satellite systems and technologies for delivering multi-media services. Under these, ESA will work in the new style with industry to help it to pursue the major commercial opportunities and maximise its share of rapidly growing markets that promise to be worth £65 billion within the next decade. The UK subscribed £47 million to these programmes. That is especially important in view of the expanding nature of the market and the need to keep a significant presence in the face of market failure, which arises from the funding of American competitors by the US military.

Another good example of pursuing the most promising commercial opportunities was the decision taken to subscribe some £28 million as ESA's share of the definition phase of the joint EU-ESA Galileo satellite navigation proposal. Mr Neil Kinnock, the EU Transport Commissioner, attended the Council for this and gave an impressive speech in support of the initiative. Mr Rodota, the ESA Director General subsequently joined EU Transport Ministers for discussion on 17th June when--I am glad to report--they decided to endorse the EU's part in the definition phase. Satellite navigation and positioning hold out significant prospects for the UK, with its established strengths in civil aviation and other spheres, which we are very keen to exploit. That is an area in which the UK should display a leadership role. The UK subscribed £8m to the definition phase and we expect our concerns about Galileo to be answered during this phase. For the project to be viable, it will need to depend largely on private finance and provide services that users want and are willing to pay for.

In answer to the point made by the noble Baroness, Lady Sharp, I must say that I believe that private finance is essential to the project. If it is to be a commercial success--and I see it as a major commercial opportunity--it is important that commercial money is in place from the start. The users must be in place and we must have a disciplined approach to exploiting the market from the beginning. If we set off thinking that we should invest money because it is a good project, but we do not have clear objectives, it could become vastly expensive but still be unrelated to the commercial needs of the future.

In responding more specifically to the noble Lord, Lord Renwick, I confirm that attention across Government is now firmly focused on the potential benefits and costs of the Galileo proposals and

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alternative solutions. It is right to say that that is important, because if we to exploit the market successfully we need to make certain that the different government departments that relate to the opportunity work closely together.

The council also made a major new commitment to the new ESA "Living Planet" programme, to which the UK subscribed £67 million over five years. This puts the study of the Earth and its environment at the forefront of the agency's activity, emphasising quality science, close collaboration between scientists and engineers and flexible, low cost missions. It will help us understand and predict the Earth's environment and humankind's effect on it. For example, it will monitor the effect of global warming on the polar icecaps, through the first UK-led Opportunity Mission CRYOSAT, and measure soil moisture and other factors that are essential to the accurate modelling of climate systems.

In commercial Earth observation, about which the noble Lord, Lord Renwick, asked, it is important to realise that the market has not expanded as fast as we thought or hoped it would. We will make determined efforts to expand opportunities to develop it through focused application programmes. We are taking action to ensure that the right framework is in place which will encourage the market to develop with UK participation. I believe that what we need is market based solutions with a much stronger element of private investment. However, if we achieve a co-ordinated effort, there will be opportunities there.

The second main objective I mentioned earlier is the pursuit of scientific excellence. While the focus has in the past been on manned space, at present it is important to realise that we are in a period of very exciting planetary exploration, which is producing extremely interesting opportunities for UK scientists. Over the next five years there are a number of important programmes such as Rosetta which will tell us about the nature of comets; Cassini-Huygens, which will provide valuable information on Saturn and its moon Titan; and the Integral X-ray telescope, which will tell us about high energy objects in the universe. There is an exciting programme of basic science here. In time this will come to capture people's imaginations as much as manned space has done in the past.

At the ministerial council, the UK was able to help broker a unanimous agreement on the funding of the mandatory programme. The total provision will be some £950 million over four years. Ministerial colleagues strongly emphasised leading edge science, particularly Mars Express and the FIRST and Planck missions which will investigate the early universe and the birth of galaxies. Both of these missions have large UK scientific involvement. We were delighted that there was such strong support for these programmes.

Mars Express will feature the Beagle 2 explorer, designed by UK scientists led by Professor Colin Pillinger from the Open University and partly built by Matra Marconi Space. It will look for life on the surface of the planet. PPARC has allocated £2.7 million for Beagle's science instrumentation and the British National Space Centre is also reviewing the case for

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support. Many people in the House and elsewhere find this an exciting programme. We all realise what a good programme it is.

As the noble Lord, Lord Renwick, pointed out, the ESA astronomy and planetary science programme is now benefiting from an innovative approach and a new creativity sparked by pressure from member states in which the UK led the way. The agreements reached in Brussels were broadly in line with PPARC expectations. The outcome means that the research council can meet its existing commitments and perhaps increase its portfolio of projects.

Other decisions taken at the ministerial council related to continued funding of an updated Ariane 5 launcher, development of new launcher technology and ESA's part in the international space station. The UK is considering whether or not to participate in the international space station utilisation programme, to facilitate access for UK experimenters, and in work on future launchers. We shall look carefully to see whether participation in these programmes would give us the same value for money that we demand from our expenditure of ESA.

On the specific question raised by the noble Lord, Lord Renwick, and the noble and gallant Lord, Lord Craig, about new launchers, when we look at this market we see it primarily as a commercial matter, as it does not involve large scientific issues. In deciding whether we will put money into the future launchers technology programme, we will take into account the following issues. It is not commonly realised that the overall space market size is around 97 billion dollars. Of this, all revenue arising from space launch services is around 7 billion dollars. Market growth is small, there are a substantial number of market entrants, and a large part of the market is inaccessible as a result of American defence policy. The profitability of operations in this market is difficult to establish.

There is also now a commercial market into which one can go to get the launch facilities that one wants. Therefore, it is not essential to have launchers as part of a dynamic space policy. While defence concerns are extremely important--we shall always bear them in mind--I am not certain that the concept of national interest is helpful in this field. In my experience, when national interest or national prestige is invoked as a concept, it is almost always a way of saying that it neither meets commercial objectives nor is it good science but we would like to do it anyway. I do not think that that is necessarily a good concept.

By comparison, the markets in telecommunications services, navigation and ground infrastructure are growing strongly and offer many opportunities for innovative firms to gain market share. We are not ruling out investment in the future launchers technology programme, but these are some of the key aspects that we will look at before going ahead.

In answer to the noble Lord, Lord Selsdon, we have had, through BNSC, contact with the Ukrainian space agency and have tried to pursue some possibilities for collaboration. The Ukrainian Zenit launcher is already widely used on a commercial basis. That illustrates the

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point that there is now out there a commercial market; and, where sensible, one can use it. Indeed, Surrey Satellites, which I have always greatly admired as a company, has been extremely entrepreneurial and has launched several successful satellites using launch services from the former Soviet Union.

The noble Earl, Lord Attlee, as always, asked some penetrating questions. He asked about the accuracy of Galileo. We are talking about metres and centimetres rather than millimetres. What is true is that this kind of precision opens up huge markets of applications which start with planes but go on to boats, cars and so on. Once one starts thinking of the possibilities, there is almost no end. When I was recently in America it was suggested that it could be used to find how far away someone's golf ball was. How accurate that is depends on one's standard of golf, but clearly it is an accurate system. We are talking about controlled access with regard to the precision system. So it will not be open to everyone to make use of this service.

I assure the noble Earl that the Mars Express project is complementary to the American project. A certain amount of competitive scientific rivalry is involved, but that is healthy. The American project will bring back samples to Earth for analysis while one of the interesting features of Beagle 2 is that it will analyse them on the spot. I was asked about the expansion of the telecommunications market. We do not know how far that will go, but it has a long way to go and it will certainly do so in the future.

I welcome this debate as an opportunity to update noble Lords on what was achieved at Brussels in directing ESA towards fostering commercial success and at building on its excellent track record in science.

To answer the question of the noble Lord, Lord Renwick, about what ESA will look like in five to 10 years' time, I hope I have shown that, whatever else, it will be very different from the ESA of today. As I mentioned earlier, at the recent council, Ministers asked for a fully developed European strategy to be prepared and put to the council by the end of the year 2000. I strongly support that request. It is vital for ESA to understand how it will look 10 years' ahead so that it can plan its structure accordingly.

It will be my purpose while I hold office as chairman to spread the consciousness that change is continuous and to help raise the profile of European space. The next full scale ESA Ministerial council is likely to be within two or three years. The United Kingdom will host it and have charge of preparing the meeting.

Our own Parliamentary Space Committee and parliamentary groups in other countries have contributed importantly to increasing awareness. I welcome the fact that the European parliamentary space committees are getting together. Perhaps I may pick up the point the noble Lord made. The work of ESA and its members states is a positive aspect of Europe and one which enables the United Kingdom, working with its European partners, to take advantage of exciting new opportunities which I hope I have outlined this evening.

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The work on the UK space strategy has been continuing in parallel with the work of the ESA Ministerial. But inevitably it has had to take second place. We intend to publish the space strategy at the end of July and to outline in it the Government's plans for the next few years. The exercise has required widespread and unprecedently extensive consultation, including the settling of budgets. In choosing July, I was conscious of the time the exercise has already taken and the enthusiasm I have repeatedly encountered on all fronts to produce this document as soon as possible. I invite the Parliamentary Space Committee to join me for a discussion on the day and for the launch and I hope that a number of noble Lords will be able to take part. The UK space strategy will illustrate the exciting scientific and commercial opportunities that exist and the forward-looking role that the UK is playing. The frontiers of space are changing rapidly and we need to keep our eyes firmly on the future.

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