WEDNESDAY 18 APRIL 2007

MALCOLM WICKS MP, AND DR DAVID WILLIAMS

  Q580  Graham Stringer: If it is so important is it surprising that you have not been to visit them yet as Science Minister?

  Malcolm Wicks: To ESA?

  Q581  Graham Stringer: Yes.

  Malcolm Wicks: I am afraid there is a range of institutions that if time travel were available I would have visited in the few months I have been Science Minister but the fact of the matter is I have not yet.

  Q582  Graham Stringer: Can we take it from that that in the pecking order of importance ESA—this is probably a throw-away line in a debate in Westminster Hall—is not as important as perhaps you were implying?

  Malcolm Wicks: I am sure that could not be a mere throw away line. I can think of some very substantial research institutions I have not yet visited but does it show that I am not interested in them or aware of them? No, it does not. I am afraid it is just a question of the priorities one has not least here in the House of Commons, but, as I say, it is my plan to visit ESA.

  Q583  Graham Stringer: You might be able to answer this better after you have visited but do you have a view at the present time about how our relationship will develop?

  Malcolm Wicks: I think it is a very good relationship. As I indicated earlier, the strategy has been (and I would judge this to be sensible) that we are really quite rigorous in terms of scrutinising what projects to support and there are ones where, despite their importance, we from a UK point of view are not supporting them. I think the relationship will grow in strength but, as I say, I think we will be selective about what projects we do support. Clearly, in terms of what you might call the environmental monitoring of our planet, I think this is something that we are very much signed up to. I saw when I visited Antarctica recently how the British Antarctic Survey were doing their work, not least in terms of climate change and they are doing very important scientific work there. They were the first people to discover the hole in the ozone layer but they also told me about the increasing importance of satellite monitoring in terms of what is happening to the levels of ice and icecaps in Antarctica, so I would emphasise the environmental importance.

  Q584  Graham Stringer: I am sure that is the case but are we really that rigorous in assessing the returns to this country when we invest in programmes? If you look at Galileo for instance, I remember from a previous inquiry if you applied the normal cost/benefit returns to Galileo that our Government would apply to our own projects we would not have supported it. Did we not get carried away with a grand project and by being good Europeans in that project?

  Malcolm Wicks: I think Galileo has certainly run into some difficulties.

  Q585  Graham Stringer: Predicted difficulties.

  Malcolm Wicks: Well—

  Q586  Graham Stringer: They were predicted.

  Malcolm Wicks: I take your view on it. We are obviously trying to use our good offices to move it forward in the right way. I do not know if it would help if Dr Williams came in here on Galileo.

  Q587  Graham Stringer: Just before you do, Dr Williams, the point that I was making really is that—and not many of us predicted it would run into difficulties—even on the figures that were before the House, it was not a project that within our own terms of normal government investment criteria we would have invested in.

  Dr Williams: I think I am in slight disagreement there. It is before my time here and it is certainly before the Minister's time, but there was a cost/benefit study done in the UK on the Galileo project which went through the system and it showed on predictions of the different services and revenues that it would be beneficial, and that is a document that we have. The decision to make it was based on that and also its strategic importance to Europe. There is no doubt that Galileo is s a major European infrastructure programme of strategic significance to the European population at large and there is an element of that in the decision-making. But at this stage I can say that there was definitely a study done which showed on the basis of assumptions about revenues for the different services and the value of the different services that Galileo was a programme that was beneficial to the UK.

  Q588  Graham Stringer: I do not want to go too far down that line but I do not really accept that. Why are we not getting our return that we should be getting out of the ESA projects? There is a €20 million deficit.

  Malcolm Wicks: Yes, for a number of years we were getting our return, indeed, I think more than our fair share of resources. That has moved the other way in recent years and we are not happy about that. There is now a proposal which we are actively interested in to have an ESA facility here in the UK, possibly at Harwell I think, and we are pursuing that with ESA, and I think if we can negotiate the right kind of project that would be very important and indeed would show our commitment to ESA but would also show our commitment to space strategy, so I recognise the problem you raise and we mean to rectify it.

  Q589  Graham Stringer: You have not really answered the question as to why it has arisen. If we were doing relatively well before why have we got into this less agreeable situation?

  Malcolm Wicks: David do you want to do something.

  Q590  Chairman: Before you answer that, David, can I just point out that in view of your first answers where really you painted an incredibly rosy picture about the British space industry, we find it difficult to understand why we suddenly find that we have a €20 million deficit on juste retour.

  Dr Williams: I said last time that if you look at the under-return that occurred from about 2002-03 there were three or four reasons for that. One is it coincided with the UK NNI increasing from 13 to 17% which meant an immediate increase in subscriptions of 25% against a programme that then takes time to filter through. That is one element. The second element was the cancellation of Eddington, a project where the UK had expected to get a return. The third element was that in one particular year we had a major under-return and the ESA figures are running averages across a period of time and if you have one bad year that affects the average thus there is a combination of reasons. The fourth reason was that UK industry re-organised itself and as a result of that we lost certain capability in the UK and that was a European restructuring issue for industry. What we have done in the last 12 months is address that issue very specifically with ESA. For example, on a project that is going out at the moment, there will be a specific statement that the UK will be over-returned. So we are moving to a situation where we are defining programmes now for ESA to release tenders where the UK will be specifically over-returned to try and re-establish the pattern of funding so that we get the right level. It is an issue that was really from 2002 to about 2004 where the problem arose in specific years and it shows in the statistics. I have done quite a lot of analysis since we last spoke on this.

  Q591  Graham Stringer: Just two follow-up questions on that. We are failing in terms of the criteria that have been set for this that we get these returns; is that a good basis for collaboration in itself and, secondly, can you tell us when we will get the return that has been agreed to, if you can give us a schedule?

  Dr Williams: In overall conditions we are within the agreed range of return. On specific areas where we are below those are the areas that we are addressing. I cannot give an exact date because it depends on the release of tenders from ESA and how we deal with them on a case-by-case basis.

  Q592  Graham Stringer: Give us a rough ballpark figure.

  Dr Williams: I would say the predictions I had from ESA recently were that by about 2009-10 we will be back to par on the system because of the feed through of contracts and spend.

  Q593  Graham Stringer: So we will have been running at deficit for about eight years?

  Dr Williams: Yes, but we will recover that deficit as well so it is a matter of recovering the position. The deficit is a running mean not an individual year mean so that as you look at the running mean once it gets to one you are actually back into credit over the period.

  Malcolm Wicks: Dr Williams has done more work on this. Have we shared that with the Committee?

  Dr Williams: I think we have shared quite a lot with the Committee. I cannot remember specifically what we have but we looked at the individual year returns to disentangle that from the running returns to bring out where it was and which programmes.

  Malcolm Wicks: Can we give you any extra data that we can on this? We recognise this is a problem and we want to rectify it.

  Q594  Graham Stringer: On the first part of the question I asked; is it a sensible way to arrange our relationship with Europe?

  Dr Williams: The juste retour principle?

  Q595  Graham Stringer: Yes, is it a sensible criterion?

  Dr Williams: In general terms I would say that we would like to move away from it to a more open tender system where everything was given on the quality of the work. The reason juste retour was there initially when ESA was created was to establish technical capability in countries in the period 1975 to present and without this return co-efficient equation the work would not necessary be built across Europe. The aim was to build pan-European skills so it is one of the criteria, but the UK is very keen on the output criteria being important. On the science we judge what we do on the output on the citation as much as we do on the industrial return and the industrial return for me is a mechanism to show we are working our way in the system; the value is in the output.

  Q596  Dr Iddon: But is it not a bit artificial? What I mean by that is that one of the major players in the field is Astrium—and I am not criticising Astrium except to say that they are a German-based company and it is not really juste retour in terms of investment in British-based manufacturing industry, which has been declining certainly in my region. Bolton invested very heavily in manufacturing in subtle engineering and heavy engineering. What are we doing, for example, to invest in small and medium-sized enterprises that would love to get into this area but cannot compete against the big boys like Astrium?

  Dr Williams: On the Astrium issue there is always a long debate about who owns a company and we look at it on where the work is undertaken and where the skillbase of the workforce is. Astrium is a European company with bases in several countries and they have those bases because they want to tap into the skills and capability of the country and also because they want to respond in this case to the ESA programme. On the SME side we work as hard as we can. We have recently done a lot of work to help SMEs get into the bidding structures. It is a slow process because in terms of being a major player in a programme you need a lot of system management skills. Finding those in the SMEs is not always easy so we have to try and marry the SMEs to companies who can provide that and make sure they get work at the lower level in industry and then build their position up slowly.

  Malcolm Wicks: I think it is important to recognise there is always an issue about how we can support SMEs. We are very aware of that across DTI, but I do not think we should paint a poor picture here. The figures I have got suggest that the UK share of the global space market is somewhere between seven and 10%—it is difficult to get these things absolutely right—and when you think that the global space market is going to grow to an estimated 150 billion by 2010, we are quite well-placed. In terms of companies, the figures I have got suggest there are 227 companies involved in this area, 70,000 jobs and that the contribution to GDP is growing, as it were, all the time, so we are not in a bad position, but one never wants to appear complacent given the real issues facing quite small companies in competing.

  Q597  Dr Iddon: Malcolm, you mentioned the ESA centre and you mentioned that in connection with Harwell. When will a decision be made on that?

  Malcolm Wicks: I have not got a date. David, have you got in your head a date?

  Dr Williams: We are hoping it will be made in the context of the ESA ministerial which is next year. That is the final decision because it will require fairly high level decision within ESA.

  Q598  Dr Iddon: In 2008?

  Dr Williams: The final decision.

  Malcolm Wicks: So discussions are taking place. There are some ideas about what the new centre would do. It is certainly a real thought that it would be based in Harwell. Personally I think it is important that there should be a significant ESA facility here in the United Kingdom.

  Q599  Chairman: And what are you arguing for?

  Malcolm Wicks: That is still being discussed. It could be aspects of general space exploration. It could be, David, trying to develop the innovation side of it.

  Dr Williams: One area is the application side so we are trying to do things that transfer the capability of space, if you like, to the economy at large, the service economy is one area, so translating the data from the Earth Observation Programmes and the Galileo programme to a state that could be used to provide services in the economy as a whole. That is one area. Exploration, as the Minister said, is the other, which is looking at building up a UK capability for the future exploration programmes and then there are one or two areas of technology underpinning that where we are having quite detailed discussions with ESA. They are a little delicate in terms of why it should come to the UK and not elsewhere and it is a little difficult to expose it all at this moment in time, if you do not mind, although I am happy to talk about it.

  Malcolm Wicks: One aspect I am interested in is whether we are being ambitious enough in terms of the satellite monitoring of our planet. There is an array of things that are going on in terms of defence, security, traffic monitoring and environmental monitoring, so it is quite an impressive record. I just wonder myself, coming from a social science and social policy background, whether we do not need to develop another strand of our thinking to see whether some of the issues we face in terms of our society and social policy could not be helped by the development of suitable satellite technology and monitoring. I am thinking of the issue, for example, of the care of an increasingly elderly and frail population where many, many families and communities are worried about what is happening to their 80 or 90-year-old person who may have Alzheimer's or something. Surely if we are able to do traffic monitoring we should be able, in the best sense, to do people monitoring where there are concerns. I think if we could bring some technologies together there, with all the sensitivities we need to apply of course to avoid a Big Brother approach, there could be some useful applications in our welfare state which I would quite like to explore.