HC Deb 29 June 1956 vol 555 cc866-70
The Minister of Defence (Sir Walter Monckton)

I will, with permission, make a statement about the contribution to be made by the German Federal Government in the current financial year towards the cost of British forces in Germany.

After prolonged and difficult negotiations in Bonn the Federal Government have undertaken to provide for 1956–57 support to the value of DM.400 million—about £34 million—for our forces in Germany.

This amount falls short by some £30 million of our local costs in Germany: it also falls short of the amount of £50 million included in the 1956–57 Service Estimates. This was the annual rate of support prevailing immediately prior to 6th May, 1956, under the Finance Convention associated with the end of the occupation régime.

In all the circumstances Her Majesty's Government has felt it necessary to accept this offer.

Mr. Gaitskell

Is the right hon. and learned Gentleman aware that his statement will be received with very great regret in all parts of the House? Is he further aware that it only shows how extremely badly the previous agreement was negotiated so that it left so open the question of what occupation costs should be paid by Germany? May I also ask whether there have been any discussions about the method of payment? Is it not the case that, in view of the difference between the £50 million allowed for in the Service Estimates and the £34 million, we shall probably have to pay the balance in gold under the E.P.U. agreement? Has there been any discussion with the German Government on that point? Can the right hon. and learned Gentleman give any information about what the arrangements are likely to be for the future?

Sir W. Monckton

If I may answer the last point first, this arrangement which is being made for this year does, as I am advised, discharge the legal obligation under the Finance Convention. But when the Notes which are being exchanged this morning are published, which they will be early next week, it will be seen that the right to negotiate for the future on merits is kept open. I cannot say for the moment, of course, what results that will have.

As to the method of payment, it is perfectly true that a large proportion of what has to be made up now will have to be paid in gold, and that, of course, has been one of the matters which have been under discussion, but I do not think that I can alter that. As to the negotiation of the original agreement, I do not think that I can usefully return to it.

Lieut.-Commander Maydon

My right hon. and learned Friend has not made in his statement any reference to the supply of arms to the Federal Government. Could he amplify his statement in that respect?

Sir W. Monckton

There has been a discussion, simultaneously with these discussions on support costs, with the Federal Government about the possibility of meeting certain of their armament requirements from the United Kingdom. Her Majesty's Government have reason to believe that, as a result, substantial orders will be placed in the United Kingdom.

Mr. C. Davies

The right hon. and learned Gentleman has been very cryptic in the last sentence of his statement, which was … in all the circumstances Her Majesty's Government have felt it necessary to accept this offer Could the right hon. and learned Gentleman not be more specific and tell us exactly what the circumstances are?

Sir W. Monckton

The reason why I used those cryptic words, if cryptic they were, is that it is well-known that we felt it right to press for the larger figure. We felt that figure to be justified, particularly in view of the relative sizes of the United Kingdom and German defence burdens in 1956–57, but in the end we accepted the settlement in the interests of European solidarity.

Viscount Hinchingbrooke

Is it not deplorable that the British bargaining position has been found so weak, and does this not call in question the whole spirit of the Western European Union agreements? Is it not a question now whether we can afford to keep four of our best divisions in Germany?

Mr. Speaker

These are large questions. I hope that hon. Members will confine their questions to the statement.

Mr. H. Wilson

Is it not a fact that the American Government pressed for £54 million and got it, and that the French Government pressed for £22 million and got £23 million, as stated in the Press this morning? Is it not also a fact that this £16 million shortfall on the Chancellor's estimate, on which his whole Budget is based, just about wipes out the whole of his real savings announced on Tuesday, when account is taken of the running down of stocks and subsidies?

Sir W. Monckton

It is true that there were separate negotiations by each of the main stationing Powers, although there were, of course, consultations between them. I cannot make a statement about the actual levels of support that will be received by other Powers, but we have good reason to believe that the amount paid to us will give us broadly the same proportion of the total support paid by the Federal Government as previously.

On the question of the effect on the £100 million, I would only point out that the plan of the Government in respect of the £100 million was to cut by that amount expenditure on services provided for in the Estimates as published. What we have sought to do is to bring about some economies, and I think that £6 million has been achieved already in Germany. We shall go on doing that.

Mr. Smithers

Should not this achievement be seen against the background of the Paris Treaty and the difficult and dangerous situation which preceded it? Also, is it not a fortunate fact that the history of these negotiations has resulted in Germany being not a potential enemy but an ally and friend of this country?

Mr. Hale

Is the right hon. and learned Gentleman further aware that the Conservatives were saying the same thing in 1934, when they were members of the Anglo-German Fellowship, and that although we seek collaboration with the German people and their restoration to the comity of Europe, this kind of action does not help friendship? Is it not a fact that originally this House had the impression conveyed to it that in the first year, at least, the whole burden would be borne by Germany, that later it was reduced to £100 million, that the Chancellor himself made a provision of £50 million in the current Budget, that we were told a week ago that there had been an offer of £35 million and that now it has gone down to £34 million? Why is that? And does the obligation still remain to maintain 80,000 British troops in Germany to defend France whilst French troops are being deployed in Algeria?

Sir W. Monckton

On the first part of the question, it is true that £50 million was the estimated figure which represented the average over the last months of the previous year. We thought that £50 million was right, and we pressed for it. I cannot go back further into the history of 1934 to deal with that. There was another point?

Mr. Hale

The other point was about the obligation given by the Prime Minister individually to maintain 80,000 troops on the Continent in Germany to help France, who has her army abroad. How long does that continue in existence?

Sir W. Monckton

That is a much wider question. I only want to say, about that, that the level of N.A.T.O. forces would be a matter for consideration in N.A.T.O. itself. It would not be appropriate for me to make a statement about that now.

Mr. Emrys Hughes

Is it not quite clear now that the whole business of financing the rearmament of Germany has become an absolute futility, and that the time has come to cut our losses and bring our people home? Does not the Minister see the irony of the fact that last year the Germans exported more motor cars than we did, and that now the people who will be thrown out of work in the motor car industry will have to help, by taxes, to finance the rearmament of Germany?

Sir W. Monckton

I think that the hon. Gentleman is trying to get me back into a position which I no longer occupy.

Mr. Robens

I should like to ask the Minister of Defence, in view of his statement that by various methods he has already reduced the cost by about £6 million, whether he could tell the House if it is his intention to reduce the Services in Germany to the state at which the contribution from the Germans would meet the costs of the British Government?

Sir W. Monckton

I cannot say that at the present moment. I am trying to pursue all the economies I can, but I cannot say what the result will be.