Thank you for your Explanatory Memorandum 13237/07 which was considered by Sub-Committee A at their meeting on 23 October 2007. The Sub-Committee decided to hold the document under scrutiny.

  The Sub-Committee support the Government's position, but would welcome more information before they clear the item from scrutiny. On Galileo, the Sub-Committee endorsed the position taken previously by Sub-Committee B, and continue to hope that a PPP deal can be agreed.

  You may be aware that Sub-Committee G reported on the EIT in July.[5] Sub-Committee A supported their view, which is that we would wish to see a rigorous evaluation of the EIT, focussed on the work of the Knowledge and Innovation Communities at a local level, carried out before the EIT's funding is expanded significantly.

  The Sub-Committee noted that the margins will be reduced for budget Headings 2 and 5 for the years 2007 and 2008. The Committee is concerned that the margins for 2008 would be too low to counter any unforeseen problems in the fields, and particularly under Heading 2, and would be interested to know whether the Government is content with the scale of the reductions. Your Explanatory Memorandum notes that the Government is pressing for a discussion on this proposal at October ECOFIN Council. The Sub-Committee would welcome an update on whether this discussion occurred, and if so, the outcome of the discussion.

23 October 2007