Clause 1.—(ISSUES FROM CONSOLIDATED FUND FOR PURCHASE OF MILITARY AIRCRAFT AND RELATED PURPOSES.)

HC Deb 17 May 1966 vol 728 cc1132-88

3.43 p.m.

The Chairman

The first Amendment selected is that in the name of the right hon. Member for Mitcham (Mr. R. Carr). It would be convenient if we took, at the same time, the second Amendment in the name of the right hon. Member for Mitcham and other hon. Members, in page 2, line 22, at end add: (4) No sum shall be issued under subsection (1) of this section unless contracts have been made in respect of the military aircraft to be purchased which provide:—

1. (a) a fixed price for the aircraft, and for parts, equipment or other articles required in connection with their use and maintenance;
2. (b) arrangements for the cancellation of any order in the event of the aircraft not meeting the required specification as to performance or time of delivery; and
3. (c) arrangements for meeting any unforeseen research and development expenditure.

Mr. Robert Carr (Mitcham)

I beg to move, in page 1, line 13, at the beginning to insert: Subject to the provisions of subsection (4) of this section I agree that it would be for the convenience of the Committee if we were to take the two Amendments together, Sir Eric.

This is a Bill to provide money for the purchase of military aircraft from the United States. We have already made clear as an Opposition that we object to that policy and think that it is a folly, but we have also agreed that we must provide this money, because, in the circumstances, it is the only way in which the Royal Air Force can have the planes which it needs. We have accepted that principle.

The purpose of the Amendment is to control the operation of that principle. We believe that it is even more than usually important in this case that the way in which this money is spent and the control over the amount spent should be particularly clearly laid down. That is why we suggest that there should be a new subsection (4) which lays down certain conditions.

The substance of our case lies in the second Amendment. Therefore, the Committee will understand if I address myself in substance to that Amendment. Our proposed subsection (4) provides that No sum shall be issued … unless contracts have been made in respect of the military aircraft to be purchased which provide a number of things.

First, we believe that these contracts must provide a fixed price for the aircraft to be purchased. We are very concerned about this matter. I would give as an example the F111 aircraft. Since this plan has been before us, it has been stressed that a fixed price, or ceiling price, hay been obtained for the F111. But that is not truly the case. We are not buying the basic F111. We are buying an F111 modified to meet the needs of the Royal Air Force.

As recently as the Second Reading debate on this Bill, the Under-Secretary of State for Defence for the Royal Air Force said: … we hope soon to negotiate a ceiling price for the modifications needed to bring the aircraft to the Royal Air Force standard of configuration."—[OFFICIAL REPORT, 11th May, 1966; Vol. 728, c. 539.] I ask the Committee to note the word "soon". This is a clear admission that a ceiling price has not yet been negotiated.

It is not sufficient simply to have negotiated a ceiling price for the basic aircraft, because that means very little. What the Committee and eventually the House will require before passing the Bill is a condition written into the Bill saying that the loans which we are authorising cannot be made until a fixed price has been obtained for the aircraft concerned, of which I have quoted the F111 as an example. With the aircraft we include the parts, equipment or other articles required in connection with their use and maintenance. We have deliberately included the word "maintenance" because there has been unfortunate experience in other countries which have purchased United States aircraft. When they have the aircraft and are using them, they have found that the cost of spares involved in maintenance has been uncontrolled and has led the purchasing country into expenditure which was uncontemplated when it purchased the aircraft. Therefore, we regard paragraph (a) of our proposed subsection (4) as very important.

Paragraph (b) of our proposed subsection (4) provides that the contracts which are to be made should include arrangements for the cancellation of any order in the event of the aircraft not meeting the required specification as to performance or time of delivery". It is very important that Parliament should insist on this if we are to have proper control of the money.

We know from our experience and the experience of other countries that aircraft and other sophisticated products can fail to meet the specifications. By their nature, they usually have to be bought before the product is finally refined and, therefore, they have to be bought when they are in a state of uncertainty. We realise that and make no complaint about it, but we believe that the contracts should lay down what should happen if, unfortunately, any of the aircraft whose purchase is contemplated by the Government should not meet their specification or should not be delivered when promised. We regard this as a simple matter of good business procedure, if I may put it in that way, and something on which the House of Commons shoud insist before it gives the Government these large borrowing powers.

Paragraph (c) of our proposed subsection asks that the contracts to be made for the aircraft should include arrangements for meeting any unforeseen research and development expenditure. Here again, I instance the F111 purely as an example of the sort of possibility against which we should guard. There are reports—and I accept that it is not unusual at this stage of an aircraft's development—that the F111 is in serious development trouble. We hope that these difficulties will be overcome, but we also know from experience that difficulties of this kind are seldom overcome without very large extra expenditure, and the question then arises of how this expenditure is to be recouped.

The contracts entered into by the Government should clearly contain clauses which lay down what is to happen if there are demands for meeting any research and development expenditure which has not been foreseen, and could not be foreseen up to the point of making the basic commitment.

Mr. Tam Dalyell (West Lothian)

The right hon. Gentleman is referring, I take it, to the F111A and not to reports about the FB111?

Mr. Carr

I am referring to reports about the F111A, but I was only instancing it as an example. I am not trying to argue, as I do not think it would be proper for me, how substantive these reports are. I am only saying that it would not be unusual in the development of highly sophisticated aircraft if difficulties of this kind arose during development and the research and development expenditure was ultimately very much higher than was originally contemplated. This is a possibility that we ought to guard against. We all hope that it does not arise, but we know from experience that it is a possibility which is not an entirely imaginary one, and which, unfortunately, has proved to be very real in other cases in the past.

I need say no more in support of this Amendment, except to emphasise again that we are asking the Committee to accept an Amendment that will make it obligatory for the Government, before they can draw the moneys that we are giving them power to borrow, to have entered into contracts for the aircraft that cover the three main points laid down in our Amendment.

Mr. Maurice Edelman (Coventry, North)

I have some sympathy with the intention of the Amendment, but it sits very ill in the mouths of right hon. Gentlemen opposite to urge that there should be fixed prices for the aircraft ordered under these contracts. Hon. Gentlemen opposite are experts in what I might call financial weightlessness as applied to the aircraft industry. If one looks at the escalation of costs during their period in power, and the way in which that escalation has complicated the time-scale of production to a point where cancellations became inevitable, one can see the extraordinary—I hope that the right hon. Member for Mitcham (Mr. R. Carr) will forgive me if I use this term—impertinence with which they propose an Amendment in favour of fixed prices, which, I understand, have already been established in principle.

We should be quite sure exactly what aircraft we are talking about when we refer to this Clause. The right hon. Gentleman mentioned the F111A. I believe that it was established last year during our debates not only that there would be a fixed price for this aircraft, but, also, that the avionics concerned would be a fixed proportion of that fixed price. I hope that this afternoon we may have confirmation from by right hon. Friend of this.

At the same time, I must agree with the right hon. Member for Mitcham that one of the great difficulties in contracts for advanced types of aircraft is the progressive creep of costs, which have steadily risen as snags have been encountered and difficulties, such as drag, arose. In the case of the F111A, this is rather more than a report—it is an established fact. I hope that this afternoon my right hon. Friend will be able to tell us definitely whether the drag which has occurred, and which the American manufacturers were making desperate efforts to overcome, has, in fact, been overcome, and whether we shall be involved in any extra cost.

Arising out of this Amendment, I should also like to ask my right hon. Friend whether the sums which we are being asked to vote for the F111 may be multiplied in the future by the fact that the variable geometry aircraft, which was to be the cornerstone of our defence system in the air, may be delayed.

My right hon. Friend recently had talks in Paris with his French counterpart about the future of the variable geometry aircraft, and I gathered that, although he was successful in establishing both price and a time-scale for the Jaguar aircraft, no price was established for the variable geometry aircraft. I understand that the talks broke down, or, at least, were interrupted, because of the difficulty in reaching agreement on a future price. I can understand why that was so, because the project, which is to be central to our continuing aircraft programme, is in the stage of gestation, when anything might well happen.

For example, perhaps my right hon. Friend can confirm or even deny that the variable geometry aircraft, which began as a 12-ton aircraft, has risen because of R.A.F. modifications, to something like 18 tons, with consequent escalation in the potential cost. This is directly relevant to the Amendment because unless the variable geometry aircraft is produced on time, at least in the time scale in which it was hoped to provide it, that will mean that the money we are asked to vote this afternoon is the thin end of the wedge.

In that event, what some of us prophesied earlier, when the F111 was in the process of being purchased—the prospect that this was only the beginning and that we might well have to go on buying more of these aircraft to keep our forces supplied—may well be the case.

The relationship of the variable geometry aircraft produced by Anglo French co-operation is of direct relevance to this Amendment. I hope that when my right hon. Friend replies he will tell us what stage the project has reached. I understand that there will be another meeting in July, but that there will not be a full-scale meeting until September. I understand also from the French communiqué—and I regret that a comparable communiqué was not issued in this country—that not only has the project not been crystallised but that it is still in the talking stage on the variable geometry project. The result might well be that, instead of the time scale for this aircraft being something like eight years' hence, it may well be substantially longer. That, in turn, will mean that further sums will have to be voted for the F111.

Consequently, that will mean that the sum which we are being asked to vote today, instead of being the final amount required, will be merely a trail blazer for future commitments. That was one of our original anxieties and it remains an anxiety. I hope that this afternoon my right hon. Friend the Minister will be able to reassure us on this point.

4.0 p.m.

Mr. Stephen Hastings (Mid-Bedfordshire)

The hon. Member for Coventry, North (Mr. Edelman) speaks with great knowledge of this subject. I was a little astonished to hear him accuse my right hon. and hon. Friends of impertinence in bringing forward the Amendment, particularly as much of what the hon. Member said later made it plain that he suffers from exactly the same misgivings as we on this side have concerning this series of contracts. The point made by the hon. Member concerning the variable geometry aircraft is an important one nevertheless, and I hope that when the Minister replies we shall hear more about it.

The aim of our Amendments is to ensure that payment is conditional upon a satisfactory contract. The speech by the Under-Secretary of State for Defence for the Royal Air Force in our recent debate, which I have read in detail, certainly leaves a number of important question marks.

I wish simply to concern myself with the FI11A, because this seems to me to be the largest imponderable of the three aircraft, and to confine my remarks to the question of modifications and spares. Modifications are potentially of two kinds: to the basic aircraft and those which are required to bring the F111A up to meet the British requirement.

To take, first, the question of modifications to the basic aircraft, we all know, as the hon. Member for Coventry, North has said, that this aeroplane is in trouble. Rumours vary. There seems to be trouble with the reheat system, the control system, the bomb load, maximum weight and, possibly, the radar. In his speech a few days ago, the Under-Secretary of State for Defence for the Royal Air Force said that he believed that we were covered for all this by a ceiling price.

My first question to the Minister is: how tight is our specification in terms of performance guarantees? In other words, if, in the end, the F111A as delivered to us falls short by 200 miles in radius of action, for example, or in bomb load, speed, take-off performance, or maximum weight, will there be penalties for these shortfalls? Certainly, there were penalties in the case of the TSR2, and I hope that the same thing will apply with the Americans. I shall be glad to hear whether this is so.

The second range of modifications is, perhaps, the most important. Unless the F111A system comes near to what TSR2 would have been—in other words, can fulfil operational requirement 343, on which both aeroplanes, I understand, have been based—it would be better to save our money and trust to luck.

A number of questions arise. First, who pays for the flight test programme to prove not the American requirements, but the British requirements? Will the ceiling price—which the Minister only "hopes" to negotiate—cover the cost of modifications arising during this flight test programme in terms of the British requirement?

The Under-Secretary said the other day that we will not pay more than the average price paid by the United States for the F111A; but I am not talking about anything which is required by the United States Government. I am talking about the British requirement. In terms of the British requirement, what provision has been made to cover the development of test equipment, both manual and automatic? Is the existing test equipment, which must be American if it exists, compatible with these British requirements? Is a new radar complex necessary? If so, will not this mean that the whole range of test equipment must be redesigned? If so, how much will this cost? Will it be covered within the ceiling price that the Minister hopes to negotiate? Certainly, the test equipment was a most expensive item with the TSR2.

The Minister knows better than I do that these complex weapons systems cannot take off at all unless the check-out equipment is in order. If one of the systems is wrong, the fact must be spotted before take-off and one has to know which system it is. That is possible only if the test equipment is geared to the radar complex as a whole. Will the existing radar fit the British requirement?

To pursue the radar question, let us assume that the terrain following is satisfactory. We have read in the Press that terrain-following flight tests are being carried out. I do not know whether this will prove to be the case, but let us give it the benefit of the doubt. I very much doubt whether the nav/attack system is adequate or comes near to our specification to meet our own operational requirement.

Is it not a fact that the nose radars are accurate enough only to cover a nuclear strike—that is to say, with a broad margin of error in aiming—and are nowhere near accurate enough for tactical strike: that is to say, to hit the span of a bridge? Unless this aeroplane system is capable of hitting the span of a bridge, it will not meet the operational requirement; it will not be able to do what TSR2 could have done. In this case, what modifications would be necessary?

I understand that three radars are involved. These are only questions; if I am wrong, the Minister will correct me when he replies. Of the three radars in the nose of the aircraft, or dishes, as I believe they are called, there is one large one in front for target acquisition, which I think is the technical term, and for ranging on the target, and two smaller ones are set behind for navigation purposes.

If my understanding is correct, the large one is inaccurate in terms of our requirement, but it feeds the nay/attack system. The technical problem, therefore, must be to transfer the rôles of these two radars: that is to say, to make the navigation radar feed the nav/attack system and make the attack radar play the other rôle. Can this be done without a computer being added? If not, whose computer will it be? Who will do this. and who will pay for it?

With the radars placed as they are, is there not a grave risk of what the technicians call aberrations, the radar being placed in such a way that vision is not direct and does not work? It took British firms months and months to design and position the nay/attack system in the TSR2, and they got it right. If they had not got it right, goodness knows what the escalation would have been. Can it be that we are faced with precisely this problem in the F111A? If we are, it follows that all the check-out equipment will also have to be modified or redeveloped. My last question on the radar is whether there is a head-up sight.

On spares and repairs, I would like to know whether the contracts for repairs will be subject to open tender, or whether they are all to go to General Dynamics. There could obviously be a great gap in the contract and there would be a possibility for costs to escalate seriously afterwards. I see no reason why contracts for repairs should not be put out to open tender to firms in this country.

Finally, what is meant by the "initial spares lay-in"? It would be interesting to have a clearer idea of this. What percentage of, say, the £2¼million capital cost of the aircraft does this represent? Is it 10, 20 or 30 per cent., for example? That would tell us something, because it would give us an idea whether the contract includes initially damaged spares, spare inner and outer wings, and spare nose fuselages.

It is notorious that spares costs for the American F104G—the Starfighter which was sold to the German Government—rose out of all proportion to the cost of the aircraft. We do not want the same thing to happen on this occasion, which is why we ask these questions. That is one of the basic reasons for this range of Amendments.

The right hon. Gentleman will remember that the F104G story holds more than that. The special development contract for the German Government's requirements—the sort of requirements which relate not to the American Government, but, in the case of the F111A, to us—rose from something like 30 million dollars to 50 million dollars, and most of that increase had to be paid by the German Government, not by the Americans. The cost per unit of that plane rose from about £400,000 as originally stipulated to something like £730,000, which is nearly double. Even now, as I understand it, the inertial navigation platform has to be modified and is not complete.

It is a seamy story which reflects no great credit on the American aviation industry or on the kind of deal which the right hon. Gentleman and the Government have let us in for. It is our business to inquire into it and ensure that these contracts are tied up properly. There are far too many loopholes in what we heard the other day, and I hope that when the right hon. Gentleman replies to these Amendments he will be able to set our minds at rest on some of them. He will never satisfy us that the Bill and everything from which it stems is not a lamentable disaster to the British aviation industry, but he may be able to set our minds at rest to some extent as far as the taxpayer is concerned.

Mr. R. J. Maxwell-Hyslop (Tiverton)

There are a considerable number of matters about which we on this side are as yet uninformed by the Minister. May I start with the words of the contract? Is there a contract? Has a definite form of contract yet been signed? Is there just an intention to purchase—an I.T.P. or heads of agreement—or is there a full contract? If there is a full contract, what does it include? Does it include a price at which we can buy replacement aircraft for those lost in combat, in training crashes, or other types of accident? If so, is that the same price as the initial price?

Is the contract, or if it does not exist, will it be, subject to renegotiation? In America, the term "fixed-price contract" means a price which is initially fixed but which is subsequently open to renegotiation up or down: down if the profits are seen to be excessive; up if the costs escalate. If that is so, then what is sold to the House of Commons as a fixed-price contract is not a fixed-price contract at all.

The Minister has not given us any indication whether the contract is signed in detail. If it is not signed in detail, we have no means of knowing whether the £430 million asked for in Clause 1 of the Bill is adequate. We have no means of knowing that unless the contract has already been signed in full detail; and I cannot imagine why we have not been told that yet.

What is to happen about spare parts? If we are told that we pay the same price as the Americans, what does that mean? Hon. Members on both sides were told by the President of General Dynamics on 9th February that, in contracts between his company and the American Government, the prices hold good for only one year. They have to be renegotiated every year; in other words, the sky is the limit. If our terms are the same as those of the American Government, they are not fixed prices at all.

The Minister must make it clear that, if that is not the case, we have not got the same terms as the American Government, but something quite different and very much better. If that is so, let the Minister claim credit for it. With his usual modesty, I am sure that he would not be hesitant to do that, because it is about the only creditable thing that he could claim about this deal.

What happens about spares obsolescence? What happens about spares which we buy and which then become worthless because, as a result of accidents or other service defects, modifications have to be brought in which render that stock of spares obsolete? Do the manufacturers guarantee to buy them back at the full price, or credit their full price against the replacement modified spares? Those are factors which materially affect the total bill that we get each and every year.

What about cost escalation of the aircraft itself due to modifications? None of us, least of all the Minister, knows what modifications will be necessary to enable the aircraft to meetitsperformance guarantees. It is commonly agreed between all parties—General Dynamics and everyone in the House except the Treasury Bench—that no one knows whether the aircraft will be able to meet its performance guarantees, because the flight test programme is in such an early stage that it has not demonstrated its ability to do so.

4.15 p.m.

That is admitted in the report of an interview in Flight of 24th February by Mr. Davis, the President of the Fort Worth division of the company which makes the aircraft. He says: Nobody can tell you what the drag is. The actual performance tests to measure drag have not yet begun. If he does not know it, I take it that the Minister agrees that he does not know it, and nor do his advisers.

What is the history of General Dynamics? Can we be confident that all is right with the design, that it is bound to come off on time, and meet its performance guarantees? We have no such grounds for confidence. The last civil aircraft produced by the company was the very much less sophisticated Convair 990, which failed disastrously to reach its performance guarantees and which cost no less than 400 million dollars in retrospective modification programmes to enable it to meet its performance guarantees.

If the cost of this aircraft escalates dramatically, are we to believe that that will be borne by the shareholders of General Dynamics, or will the renegotiation procedures come into effect? Alternatively, will they lump it on to the spares prices in the way that Lockheed lumped its additional costs on to the spares prices of the 104Gs sold to N.A.T.O., which has bled the N.A.T.O. countries white, as anyone in Belgium or Germany will confirm.

Do they accept financial responsibility for the replacement of aircraft lost in crashes due to malfunctioning systems? We need to know that. We know that they have not in the case of the F104G, because we know that the German taxpayer has to replace the 54 which have already been lost in crashes. I do not suggest that even the majority of the F104 crashes were due to structural defects in design or development. Some of them are due to pilot error, some are due to bad maintenance, and some are due to bad local manufacture. It would be unfair to lay that figure of 54 at Lockheed's door.

We are dealing here with an aircraft which is much more sophisticated, than the Lockheed F104 produced by a company whose record in civil aviation does not lead one to look forward with confidence to its ability to meet conditions. which it has yet to demonstrate. What happens if the aircraft does not meet its performance guarantees? Have we any right to cancel the contract? The Committee may think that it does not really matter whether we have or not. It would be a pretty useless right to operate, because we would be left with no aircraft.

What is our defence against defective performance? If it is the same defence as the United States Air Force has, namely, that for each percentage change of X in various aspects of performance there is a financial penalty of Y, how much is the financial penalty? Unless we know. we are not in a position to judge whether or not the sums provided are adequate. What happens, for instance, if we need retrospective modifications, not because the aircraft is defective. but because our operational requirements change? Can they "take us for a ride" on those prices?

I think that it is widely recognised, except by the Left wing of the Labour Party, that this aircraft's primary glory lies, if I may use such a word, in its excellence as an instrument of wreaking havoc in a nuclear rôle when it is using atomic bombs. When it is using conventional bombs in a low altitude high speed attack rôle, with its wings folded back to the maximum amount, it has a very inconsiderable bomb-load indeed-10,000 lb. only, as was shown upstairs to Members on both sides on a diagram provided by the President of General Dynamics. It is when it is used in a nuclear capacity that its advantages show.

Is this why the Government are buying it? Do they hope that their Left wing will not realise that they are buying an aircraft primarily for the delivery of nuclear weapons? Do they hope that their Left wing will think that they are buying an aircraft primarily for the delivery of conventional weapons?

Mr. John Rankin (Glasgow, Govan)

I am sure the hon. Gentleman realises that some members of the Left wing were at the meeting to which he referred.

Mr. Maxwell-Hyslop

Yes, but only those who normally show an interest in aviation, rather than those who normally show an interest in affairs in Vietnam.

Mr. Rankin

No.

Mr. Maxwell-Hyslop

We are buying an aircraft which can be used anywhere throughout the world.

Earlier, I asked what provisions we had written into the contract as to the price at which replacement aircraft could be bought. It is easy to think that because an aircraft is devastatingly sophisticated, we buy with that money a degree of invulnerability. The Minister may remember that during the Korean War more than 80 per cent. of the United Nations aircraft shot down were brought down by light anti-aircraft fire. The heavy air casualties which the Americans are suffering in Vietnam today are not caused primarily by sophisticated weapons. They are caused by quite ordinary, very skilfully used, anti-aircraft guns, not even missiles, and the casualty rate of sophisticated aircraft like the Phantom is alarmingly high.

Let us not, therefore, think that if these aircraft are used in anger there will not be many losses, and 50 of them, which is presumably all that is encompassed within this figure of £430 million—of course other things are encompassed as well—will not last us very long when we consider the number to be used for crew training, the number which will be out of action for maintenance or modification, and the rate of attrition which will undoubtedly fall on them when they are used in action.

I think that the right hon. Gentleman must "come clean" with the Commmittee and admit either that it is not intended ever to use these aircraft, or that he has made contractual commitments as to the price of replacements. The Committee must know this before we move on from this Amendment, otherwise we may find that, having lit the blue touch paper, there is much more in the firework than we thought because this commitment is not limited to the 50 aircraft about which we have been talking.

If we are to have them for an operational rôle, we shall need replacements for them as and when they are crashed or lost through military action, and we must be told what provisions there are in the contract covering these replacements. On the whole, these negotiations leave a nasty taste in the mouth, the sort of taste which a dash of Worcester sauce will not wash away.

To far too great an extent the House of Commons has been led to suppose that what is being bought is a fixed number of aircraft, at an immutable cost whatever happens, of known performance, of demonstrated capacity to meet their operational guarantees, with a demonstrated capacity to handle in an acceptable manner, with proven ability to be delivered at the required date—this was part of the argument put forward for getting the aircraft in the first instance—and that they will prove to be an effective deliverer of conventional weapons in just the type of operation which is taking place in Vietnam at the moment, in the course of which a large number of very sophisticated aircraft are being lost.

The Minister has a long way to go before he convinces us on those points. The moment of truth has arrived for him in this Committee. If he says that he does not know, he should not be sitting on that Bench as the Minister of Aviation. If he does know the answers, which I hope he does, it is his duty to share that knowledge with the Committee, because nothing that he has been asked infringes security in any way at all. Without answers to those questions, the Committee cannot know whether the money that it is voting is enough or too little for the task which lies before the Armed Forces.

We believe that without the Amendment the road will be open and clear for disastrous cost escalation. These aircraft are so expensive that they have to last us a lifetime. For those that survive we have to live with the spares costs, the maintenance costs, the obsolescence costs, the modification costs, and the overhead costs for many years, and indeed for more years than are covered by the six mentioned in the Bill. I think that the Committee is more than due for information, rather than just expressions of hope and confidence from the Treasury Bench.

4.30 p.m.

Mr. William Baxter (West Stirlingshire)

I have listened with interest to the hon. Members for Mid-Bedfordshire (Mr. Hastings), and Tiverton (Mr. Maxwell-Hyslop), and I consider that they have posed valid questions on the sensibility or otherwise of proceeding further with this project, and that there is no question but that the onus of responsibility rests squarely on the shoulders of the Government to give sensible, reasonable, and understandable answers to the questions which have been asked.

However, like my hon. Friend the Member for Coventry, North (Mr. Edelman), I find it rather difficult to listen to Opposition back bench speakers posing those questions, because for many years they remained silent while the Conservative Government were entering into commitments with the Americans for the Phantom and the C.130 aircraft. No questions were asked, and no guarantees were given, as to what we were going to pay, and what we would get in return. Similarly, with the purchase of the Polaris submarines, there was no great challenge from Conservative back benchers as to whether we were making a good agreement with the Americans for the delivery of these items of mass destruction. One or two questions spring to mind when listening to the arguments for and against this proposal. One thing which concerns me is that this appears to be a commitment by this nation, through the Government, to purchase these aircraft, together with the aircraft contracted for by the previous Government, to sustain our rôle in the Far East. It is within the knowledge of most people that there is a considerable volume of opinion on these benches, and throughout the country, against our commitments in this part of the world. The main volume of opinion is most anxious that the Government should cut back in this respect.

Presuming that there is a change in the occupants of the Front Bench in the not too far distant future, and that the new occupants are of this mind, is there anything in the agreement that will permit them to cut back on this considerable expenditure? The hon. Member for Tiverton said quite clearly that the contract for fixed prices would run only for one year. If so, does the whole agreement run only for one year, or is there a clause in it by which we can terminate it, and cease to proceed any further with this great folly?

We are told that we are to come to some agreement with America to obtain a loan of £430 million for the purchase of some of these aircraft, and that we should congratulate ourselves. In the Second Reading debate the Under-Secretary of State for Defence for the Royal Air Force made it abundantly clear that at 4¾ per cent. it was a great bargain. We were led to believe that in the normal course of events the American Government would support our obtaining orders for ships, etc., up to American requirements and that this would help our balance of payments.

This is rather misleading, in that we are to pay, over and above this £430 million, a further £230 million in cash transactions. That is not all. We have been told in various Answers to Questions that we are providing British equipment in those aircraft to the extent of almost 46 per cent. That presupposes that the contract into which we are entering in respect of these aircraft will cost the nation roughly £1,000 million—46 per cent. of this being material and goods provided by our own people, the other being provided by the Americans. If that is so, it is a terrific sum to which to commit the country for the rôle east of Suez when, at the moment, many of our people are out on strike for a meagre wage. The two things do not run in unison, nor are they compatible.

I should like some clarification on these points. I want to put on record clearly and concisely what view I take. The hon. Member for Mid-Bedfordshire (Mr. Hastings) said that it is almost a lottery, and that it is a matter of "take it or leave it". Perhaps we shall be lucky enough to keep going without purchasing anything.

Mr. Hastings

I was not trying to suggest something literally in those terms; I was simply suggesting that only if these modified aircraft succeed in meeting British requirements shall we avoid wasting our money.

Mr. Baxter

There is no guarantee that it will be modified to meet British requirements. Nobody has told us that it will be. As the hon. Member has rightly pointed out, over the years many such projects have been cancelled because they did not come up to our expectations. I need not go over the whole list. We know that the same situation has existed in America. There has been no guarantee. But even if there were a guarantee it is clear that the ultimate aim will be to fit the aircraft with a weapon carrying a nuclear warhead. It will be used in that capacity sooner or later, for there is no other purpose in purchasing such an aircraft.

I want to put on record the fact that I am diametrically opposed to the Government and the Opposition on the purchase of aircraft for this purpose. I cannot understand how the Government can act in this way when they have gone on record as saying that we shall not be a nuclear Power in the future. We are committing the nation, over the next 10 years, to the purchase of aircraft for nuclear war and for no other purpose.

I hope that there are other means by which we can register our protest, but it appears that on both sides of the Committee there is general agreement that we should continue this policy of committing the nation to considerable expenditure—a policy which is condemned by many because it really amounts to the desire to contain China and to continue our warlike efforts in the area east of Suez. I say categorically that this is the height of madness, and that I cannot understand a Socialist Government even contemplating such an agreement.

Mr. Albert Booth (Barrow-in-Furness)

If there is any merit in the proposal put before us this afternoon by the Opposition it must rest on the feasibility of fixing the cost for aircraft such as those we are now to purchase. I contend that it is impossible to sustain an argument based upon the idea of fixing costs. We are buying aircraft which have never been completed. It is almost inevitable that we shall do this if we try to continue the military rôle which we have set ourselves. In my opinion, this is an argument against continuing that military rôle. Nevertheless, under the present Government and previous Governments we have committed ourselves time and again to the purchase of aircraft which have not existed—to the purchase of brilliant military ideas and wonderful specifications on which hundreds of millions of £s have been expended in an attempt to obtain a superior weapon.

The reason why America is seeking to sell these aircraft at the moment is that they know quite clearly from their own experience and the experience of other countries that the research and development costs necessary to bring these aircraft into reality are so high that they must spread the costs by sales to other countries.

I can give a simple hypothetical example. If the building of a single prototype of some military aircraft costs £80 million, which is not an unrealistic sum, since many have cost more than that, and the final version can be made at £1 million a time—which is a very low cost for a military aircraft—if 80 can be sold abroad at £2 million each, research and development costs are recouped. But no one can say, when setting out to produce this military aircraft, what those research and development costs will be.

Those who believe in this policy and in the purchase of aircraft which are highly sophisticated and superior to anything that has ever flown before in the military field should also realise that it is inevitable that we are attempting something which can be done only by the expenditure of enormous sums of money. If there is any great wisdom in the old military adage that surprise is one's biggest asset, it is clear that a country would not sell its finest weapon if it could contain within it an element of surprise. We cannot do this, because we cannot afford it today. Even if we could get a fixed cost for this version of this plane, it will not be long before there is a new version which our military advisers will tell us we need, and the cost would increase enormously.

In this age of bringing down the cost of producing the aircraft from our industry, specifications may well have to be altered so that we can buy something which we can afford. But once we are engaged upon the course which we are considering now, of buying American aircraft, we will be doing irreparable harm to our own aircraft industry if, by changing specifications to admit the purchase of American aircraft, we do not at the same time give British manufacturers an opportunity to build planes to that specification or to give us at least as reasonable a guess of what their cost would be as the Americans can give us.

Nobody can say that an aircraft manufacturer can give anything better than a reasonable guess at the cost of producing something merely from looking at its specification, if it embodies something which he has never produced before. When the present Opposition were the Government they made a whole series of false starts in an attempt to provide the Royal Air Force with what they believed would be highly advanced and suitable planes—I evidenced this last week in the number of cancellations which I listed—but, having made all these false starts, they brought this country to the point where there was a clear, ruthless and concise logic in the programme for producing planes which they set the aircraft industry.

I hand them this: there was a logic about it. The planes fitted into a pattern which made military sense, but the tragedy was that once one is committed to that, and if one holds to that commitment, one must be faced with costs of the order of those in the bill for the TSR2. It may have been possible to carry out that programme, but we should have done it at a cost which would have been ruinous to the country's economy.

On the other hand, I am very unhappy about the fact that the programme of this Government commits us to buying American aircraft which must inevitably be less expensive because of the share out of research and development costs. Having shared out research and development costs, one has to give away the "know-how" which flows from overcoming the technical problems of building to such a high military specification. The value of this "know-how" to our civil aircraft industry is almost inestimable. If one concedes this, what then is the judgment which one should make of the proposition put to us tonight?

If one believes, as I do not, that it is possible to fix a price for these planes, one would have to weigh this against the effect on our own industry. If, on the other hand, as I believe, it is impossible to fix prices for planes like this, the only sane course of action is to say that we will set standards for what we believe to be morally sound and humane social aims. We would meet this by taxation and by raising money, as a Government have the right to do, but we must then accept that we cannot go on in the way this country has been trying to do for so many years—raising the money for ruinous military commitments which are damaging to the future of our industry, to our country's social standards and our moral standing in the world.

4.45 p.m.

The Minister of Aviation (Mr. Frederick Motley)

The Amendment seeks, by statutory means, to impose quite unrealistic limitations on the Government's powers to negotiate the contracts to be financed under the Bill. As the debate proceeded I found it difficult to accept what I knew to be the case—that both the hon. Member for Mid-Bedfordshire (Mr. Hastings) and the hon. Member for Tiverton (Mr. Maxwell-Hyslop) had, and possibly still have, responsible positions in the aircraft industry. On the other hand, it was refreshing that my hon. Friend the Member for Barrow-in-Furness (Mr. Booth), who has considerable firsthand experience himself, brought a much more sober touch of realism to our discussions.

Clearly, no industry could have imposed upon it the kind of limitation which, in many speeches went much beyond the terms of the Amendment. The conditions under which the aircraft will be bought have to a large extent already been determined. They follow the same general lines of the arrangements negotiated by the Conservative Government for the naval Phantom, but they embody significant improvements. I must stress that the Bill is not only about the F111A: it also covers the arrangements for the Phantom, the first purchase of which was made by our predecessors, and the C130.

Since the hon. Member for Tiverton has asked about the contractual arrangements, I will say that these aircraft are required under arrangements, or memoranda of understanding, entered into between the United States Government and Her Majesty's Government. They are Government-to-Government agreements. These arrangements define the price of aircraft, delivery, pattern and, broadly, the financial arrangements, including costs. The arrangements are supplemented by implementing sales orders, or letters of offer or acceptance, which set out the contractual terms in great detail.

The important point is that the United States Government had already entered into a contract with their suppliers for the development and purchase of these aircraft, and for practical purposes we are buying ourselves into these existing contracts. This means to a large extent that the contractual terms are fixed and we have to accept them as settled by the United States Government. Of course, in return, we obtain the very substantial benefit of those terms. This is the position, in broad outline, followed by the previous Government.

It is this fact which has fixed the present arrangements contained in all these agreements. Under the arrangements, the cost to the United Kingdom will be computed, at the time of delivery of the last of our aircraft, on the basis that the United Kingdom should pay a proportionate share of the costs incurred, except that, in the case of the Phantom and the C130, we will not contribute to research and development costs incurred before the arrangements were finalised in February, 1965, and, in the case of the F111, a ceiling price has been obtained for what is referred to as the basic aircraft.

It may be convient if I go through the three parts of the Amendment. The first requires us to agree a fixed price for every element in the transaction. Such a fixed price contract across the whole field would not be negotiable, except perhaps, at a prohibitive price. Obviously, any contractor will quote a fixed price if that fixed price is high enough to cover every possible contingency. What we have done is to negotiate the most realistic basis for pricing our orders to ensure that we have an arrangement which obliges us to meet our fair share, but no more than our fair share, of the cost of the programme in which we shall be participating.

In essence, the price which we have to pay for the C130 and for that part of the Phantom which is common to both British and U.S. programmes will be based on an average price for a long production run, of which our own orders form only a small part.

For the basic F111, as has been explained many times in the House, we have a ceiling price. As regards the spares and other items to be purchased under the programme, we have a firm undertaking that we shall pay no more than the price which the United States forces themselves are being charged for the same article. This assurance goes very far to show that the suspicions voiced by some hon. Members on Second Reading and again today that the Americans might seek to recover unexpected extra costs by loading them on the price of spares, are completely groundless.

Mr. R. Carr

The right hon. Gentleman again said that we have a ceiling price for the F111. His hon. Friend the Under-Secretary of State for Defence for the Royal Air Force stated categorically on Second Reading last week that we had not a ceiling price for the Royal Air Force version. He said that he hoped soon to negotiate a ceiling price. This is one of the points which bothers us. What is the good of having a ceiling price for an aircraft we are not going to have?

Mr. Mulley

I was coming to that point. I made it clear that the ceiling price relates to the basic F111. That is rather more than 80 per cent. of the total cost. But since I could not deliver all my speech in one sentence, and since I should be accused of discourtesy if I tried to do so, I have not reached the other point. I have a note of the right hon. Gentleman's remarks.

I should tell the Committee that my hon. Friend the Under-Secretary of State for Defence for the Royal Air Force is not able to be present today owing to a bereavement. His father died very suddenly. I think that the Committee understands that in those circumstances he is not able to be here, as he wished, to participate in and listen to the debate.

A further point about the cost of spares was raised by the hon. Member for Mid-Bedfordshire when he asked what was meant by the initial lay-in of spares. This covers the first buy of spares to cover the initial period of the introduction of the aircraft, the purchase of a stock of spare engines and any ancillary ground handling, servicing and testing equipment which are required. He asked what proportion of the cost this would bear to the aircraft themselves. The cost of the initial lay-in of spares—I have not the exact figure—is about 20 per cent. of the all-up cost of the aircraft. Hon. Members apparently do not appreciate that we have gone to very great trouble to get assurances of price stability into the programme. Taking it as a whole, I think it can be said that the arrangements represent an advance on any previous arrangement embodied in orders for complex and costly aircraft.

The second paragraph of the Amendment provides that we should be able to cancel if the aircraft failed to meet the specifications or were late. I am not at all sure that this is a very meaningful paragraph. Our arrangements with the Americans already provide that we may negotiate cancellation terms at any time. Cancellation is always possible at a price. If this paragraph means anything, it must mean that the Government are to be obliged to negotiate that we may cancel without penalty in the event of deviation from the specification or forecast delivery date.

Apart from the fact that the contract provisions for some of these aircraft have already been negotiated, such a provision would be quite impracticable. It is possible to negotiate production contracts providing penalties in the event of late deliveries or failure to meet the specification, and under the price arrangements negotiated with the United States Government we shall obtain the benefit of the penalty conditions embodied, for example, in the Fill contract between the Department of Defense and its suppliers. But we could not get a blanket assurance such as the paragraph envisages. In a practical commercial world it is simply "not on".

I must make it quite clear that I do not consider it in the least likely that we shall find ourselves in this position in relation to this programme, which we considered long and deeply before we committed ourselves and in which we have every confidence.

Mr. R. T. Paget (Northampton)

In the American contract the price of spares includes a very high level of servicing. Are we to get the same level of servicing? Is it applicable over here? If not, how are the two prices separated?

Mr. Mulley

The servicing arrangements have still to be finalised, but I will look into that point and write to my hon. and learned Friend about it.

My hon. Friend the Member for Coventry, North (Mr. Edelman) raised technical questions about the performance of the aircraft. There has been much publicity about the drag. As my hon. Friend said, when the President of General Dynamics was here he was very frank with hon. Members and agreed that this was a considerable problem. I have great confidence that they will be able to reduce it, if not the whole of it, at any rate a very considerable part of it. But both my Department and the Royal Air Force keep in very close touch with their counterparts in the United States, and we are quite satisfied that even if the whole of the drag were not removed, nevertheless the plane would meet the operational requirements of the Royal Air Force, as my hon. and right hon. Friends have said many times. We are quite satisfied that at the end of the day the aircraft will meet the Royal Air Force's requirements. If it should happen that it does not, we are protected by the very stringent penalties and conditions which the United States have in the contract with all their suppliers in the event that the aircraft does not meet their national requirements. The Committee may be assured on that point.

Mr. Edelman

Is it not a fact that in comparable cases of drag in previous aircraft it has taken approximately a year to overcome the problems, using all the resources which the company had? Has the F111A programme been substantially retarded by this problem of drag which has arisen? If so, to what extent?

Mr. Mulley

We are not immediately concerned with the beginning of the deliveries of the F111 because they are to go to the United States Air Force, which is due to get aircraft at least a year before the delivery date to us. But I am informed that there is no delay in the expected delivery of the first aircraft to the United States Air Force.

The third paragraph of the Amendment requires us to make arrangements for meeting any unforeseen research and development expenditure". I must explain the present position in this matter. Our arrangements with the Americans require us to make no contribution to the past research and development costs of the C130 or the basic American Phantom. By far the greater part of our research and development liability for these two aircraft will derive from the cost of modifications to meet British requirements and, particularly, to incorporate British components. I am sure that the Committee approves of the fact that we have made the maximum arrangements to put as many British components in these two aircraft as possible. This has led to modifications in the design which, in turn, have led to some research and development expenditure. The hulk of this expenditure is the modification of the Phantom in order to take the Spey engine. I emphasise that we are concerned here only with the dollar side of the programme, and this is neither particularly large nor complex in relation to the programme we are considering.

5.0 p.m.

So much for the C130 and the Phantom. It is only in respect of the F111 that the United States Government are requiring us to meet a share of the research and development costs of the aircraft. There are two main considerations here. First, our total liability will be determined by the percentage of the total production of the aircraft which we acquire; at present rather less than 5 per cent. of the whole. Secondly, regarding the basic aircraft—and I remind the Committee that the term "basic aircraft" is expected to cover more than 80 per cent. of the total cost—even this share is covered by the ceiling price arrangements. We cannot pay more than the ceiling price for the aircraft, no matter how much research and development costs rise.

Mr. W. Baxter

My right hon. Friend has spoken about ceiling prices and one thing and another, but will he express what this all means in simple terms? Are we paying £2½ million for each of these aircraft, and what other aircraft are we purchasing? What are we paying for each one? How much are we paying for spares and what else are we buying? How much is involved in the total bill, bearing in mind the amount of goods which we are supplying by way of the Spey engine and so on?

Mr. Mulley

If my hon. Friend will read the Bill he will see that the purpose of this debate is to give authority for my right hon. Friends at the Treasury to borrow £430 million over a period of six years.

Mr. Baxter

What is the total figure?

Mr. Mulley

I have given the total figure.

Mr. Baxter

Break it down for the Committee.

Mr. Mulley

I cannot break down figures of this character in a Committee debate. If my hon. Friend will write to me I will let him have a complete breakdown of the figures which have been published. I cannot take up the time of the Committee giving the total of every item comprised in the overall sum. I apologise to my hon. Friend, but he made his speech, to which I am replying, and he did not stress these points in his observations. I understand his concern about the whole programme and the individual costs but, with respect, I cannot accept his view of the position.

Mr. Baxter

Irrespective of whether or not my hon. Friend accepts my opinion, the taxpayers of this country have a right to know how this total sum will be spent. Will we pay £2½ million for each F111, what will we pay for the Phantom, how much money will be spent in this country—is it true that £400 million will be spent here—and what is the total amount of interest which will be paid on the American loan?

Mr. Mulley

All those figures have been given in defence debates. The total in dollars over the 10-year period of this programme has been given by my right hon. Friend on many occasions. It is £660 million. The loan element is £430 million and, as I have said, we are still dealing with the percentage of the British element in a number of these aircraft. For the Phantom it is 45 per cent. For the other aircraft, because the numbers are smaller, it has not been practicable to have the same extent of British equipment, and I am sure that my hon. Friend appreciates that.

The ceiling price of the basic aircraft—which, in short, is the part of the American aircraft which we need before we adapt it for British equipment and requirements—is £2.1 million, and it is estimated that, with the additional modifications for R.A.F. purposes, it will be £2.5 million.

I wish to deal with the point made by the right hon. Member for Mitcham (Mr. R. Carr) about why we have not already got the ceiling price for the research and development concerned with our modifications. The short answer is that this takes time to negotiate because on a number of these things a whole list of technical questions was raised by us and we want to satisfy ourselves that what we are getting will meet the R.A.F.'s requirements, not only broadly but in total. As my hon. Friend the Under-Secretary of State said, we hope this summer to get a fixed price, the ceiling price, for the research and development element of the adaptation of the basic aircraft for our requirements.

To sum up the position, all the proposed paragraphs of the Amendment seek to place quite unrealistic limitations on the negotiating power of the Government. When hon. Members, particularly those with knowledge of these matters, consider this, they will realise that it would be unrealistic to proceed on the lines which the right hon. Member for Mitcham and his hon. Friends are seeking to write into the Bill. The safeguards for this country envisaged in the Amendment have already been incorporated in our arrangements, so far as it is practicable and sensible to do so.

On Second Reading the right hon. Member for Mitcham, on behalf of the Opposition, said that while the Opposition had reservations about some items in the programme, he would not advise his hon. Friends to oppose the Bill. I suggest that the Amendment is seeking to kill or block the Bill by other means and, while I accept that it was absolutely proper for these matters to be aired, if the Opposition pressed the Amendment they would be going back on the position which they took up on Second Reading. However, if the Amendment is pressed, I must advise my hon. Friends to reject it.

Mr. Maxwell-Hyslop

Is the right hon. Gentleman aware that most of the things which he has said could not be done—by way of agreements covering spares, costs and so on—are done in a large number of civil contracts which are placed at about the same stage of gestation of an aircraft's life, and would he therefore say why this could not be done in this military project, instead of merely asserting that it could not be done?

Mr. Mulley

I did not say that anything could not be done in relation to the spares. I said that the spares position was fully safeguarded, that we will be acquiring spares on the same terms and under the same arrangements as the United States Government and United States Air Force, who are the persons in contract with the suppliers. This is a quite proper arrangement and the kind of arrangement which I think the hon. Gentleman has in mind.

Mr. Maxwell-Hyslop

But is not the right hon. Gentleman aware that they can load on to their spares prices to the American Government—and, therefore, to us—unexpected development costs which go on to their overheads and then on to their spares prices?

Mr. Mulley

I accept that there are all maner of hypothetical considerations, but I assure the hon. Gentleman that there are many people, including Mr. McNamara, in the Department of Defence who know as much, if not rather more, about the commercial and technical side of negotiating aircraft contracts than the hon. Gentleman. I am certain that they have taken care of these points.

Mr. John Hall (Wycombe)

We find ourselves debating Amendments to a Treasury Bill which is really a piece of machinery designed to make it possible for the Government to enter into certain loan arrangements to purchase American aircraft. We debated that at considerable length on Second Reading. Today, hon. Members on both sides of the Committee have questioned the wisdom of the policy which has led to the necessity for the Bill and grave anxiety has been expressed about the possible effect on the future of the British aircraft industry of what sometimes regarded or described as the open-ended nature of this commitment.

Many of the hon. Members who have taken part have great knowledge of these matters and this has, therefore, been a somewhat technical debate. I confess that I have found difficulty in understanding much of what has been said. Hon. Members speaking with great technical knowledge and understanding of the problems have put a number of questions to the Minister and he has by no means answered them. Since I have been on this side of the House of Commons I have listened to a number of unsatisfactory replies from the Government. But if there were a league table for unsatisfactory replies, I assure the Minister of Aviation that he would be very near the top of the list.

I do not think that the right hon. Gentleman has put at rest the anxieties which have been expressed. I could understand that if I were speaking only for hon. and right hon. Members on this side of the Committee, but without exception every hon. Member who spoke on Second Reading and in the debate this afternoon has shown hostility to the policy behind the Bill—I do not say to the Bill itself, which is a technical Measure, but to the policy behind it. There has not been a single friend of the Government's policy from the right hon. Gentleman's side or from ours. I cannot believe that everyone is out of step except "our Fred". There must be some substance in the anxieties expressed on both sides.

The Minister has not dealt with the questions which have been asked. He has criticised the Amendments put forward by my right hon. Friend the Member for Mitcham (Mr. R. Carr) as in a sense unrealistic. He has suggested that no contract could be entered into which took account of the various provisions laid down in the Amendment proposed to line 22. That is not strictly accurate because many contracts can take account of the conditions there laid down. There is no reason why if a contract was entered into freely between this Government and American suppliers an arrangement could not be made to take these matters into account. We have accepted a contract which is already in existence between the American Government and the manufacturers of aircraft and have come into that.

We have accepted all the provisions and conditions of those contracts without regard to our own requirements and needs. The Minister said, when referring to (c) arrangements for meeting any unforeseen research and development expenditure, that those arrangements were in the arrangements the Government had made, but what are the arrangements the Government have made? The right hon. Gentleman has made a number of vague statements that these things have been taken care of, but he has not said what the arrangements are.

Mr. Mulley

It is unfortunate that one has to say these things so often. There is no R & D as regards the Phantom and the C130s. As regards the F111, in the agreement between ourselves and the Americans we have a ceiling price which prevents unforeseen and sharp development charges there. The only research and development not settled in this way are on the dollar element of adaptations to fit British equipment. Surely no one wants to say that we should not try to do this. As the Parliamentary Secretary said at the end of Second Reading debate, we are hoping to get a fixed price or ceiling by the end of the summer. That is the position on unforeseen R & D.

Mr. Maxwell-Hyslop

Will my right hon. Friend the Member for Wycombe (Mr. John Hall) agree that we do not mind the Minister giving information so long as he gives the same answers to the same questions?

Mr. Hall

That is right. In this case it is unlike the student who called on a professor of economics and said, "My goodness, these are the same questions you asked three years ago", and the professor answered, "Oh yes, but the answers are quite different". The Minister said that on cancellations we have the. Same rights, if that is the correct word, as apply to manufacturers and the United States Government. If there is a desire to cancel an aircraft there are certain provisions, if I understood the Minister rightly, by which we can get out of some part of this contract, but it is on the same basis as that which exists between manufacturers and the Defence Department in Washington. Did I understand him correctly?

5.15 p.m.

Mr. Mulley

We have the same protection on shortcomings of performance as has the United States Government, yes.

Mr. Hall

It means that we can cancel an aircraft if we find it does not come up to the stated performance? Is that correct?

Mr. Mulley

I hoped that I had covered the point. We have the same contractual arrangements as the United States Government. If the date and specifications are not met the manufacturers have very severe penalties. I am sure that the President of General Dynamics dealt with this.

Mr. Hall

I did not have the advantage of hearing him on that occasion. I cannot say the extent of these penalties and whether they would cover our liabilities in this matter. When we take account of the conditions which apply to ourselves and the manufacturers, when we consider the effect on development costs—part of which it is agreed we may have to pay on the F111, and we do not know what will be our future requirements for the F111A—we see that in this Bill we have an open-ended commitment. We may well find that we are not providing sufficient money for the future commitments for this aircraft and for spares and maintenance.

We have not heard anything satisfactory about arrangements for servicing these aircraft. The Minister might have told us about that. What we are doing by the policy which is allowed by the Bill is so to commit ourselves to the American aircraft industry that there will no retreat. Whether we want or not, we shall be forced to go on and vote more money in support of this policy.

Mr. W. Baxter

Does not the hon. Gentleman agree that the Conservative Government committed us to the purchase of the Phantoms?

Mr. Rankin

And the C130.

Mr. Baxter

Yes, the cost of 50 of the F111s at £2½ million each comes to £125 million and the sum we are actually discussing is £160 million plus 40 per cent. of the equipment provided by this country, bringing the total bill to almost £1,000 million. What did the Conservative Government do about that? It is not right for the pot to call the kettle black.

Mr. Hall

That intervention is very interesting. The policy of the previous Government in making some purchases from the American aircraft industry did not lead to the large-scale cancellation of British aircraft which has practically paralysed the British aircraft industry, but, if that policy was wrong, the then Opposition failed in their duty not to impress this on the House. I am not saying whether a mistake was made or not, but, if a mistake was made, there is all the more reason why we should not repeat it in a far worse form today.

I accept that the hon. Member for West Stirlingshire (Mr. W. Baxter) believes that a mistake was made and I expect his support if we take this Amendment to a Division. If he believes that it is entirely wrong that the American aircraft industry should have a stranglehold on our aviation industry and that the policy enshrined in this Bill is likely to be detrimental to the interests of this country, I hope that he will have the courage of his convictions and follow-them into the Division Lobby. I am confidently looking for his support and the support of those who have spoken in this debate.

A great deal has been said in this debate, mostly of a technical nature. I do not propose to detain the Committee longer on that. We have heard from both sides of the Committee what I consider very serious and almost damning indictments of the policy behind the Bill. I am not condemning the Bill, but the policy behind it. We have not had at any time satisfactory answers to the questions which have been raised. The Bill has had no support from either side of the Committee. Not one Member has had one good word to say for it. An occasional Member has had a side swipe at the Opposition benches merely to keep himself not too far out of line with his own Front Bench. On policy, the Bill has been universally condemned.

No one can argue that the Amendments have been replied to. No one can say that the answers we asked for have been given. No one can say that the anxieties which have been expressed about the future of the aviation industry, and indeed of the Air Force, have been in any way allayed. For these reasons, I would advise my right hon. and hon. Friends to divide on these issues.

Mr. Dalyell

In my view, so far this has been a very unsatisfactory afternoon's work. The fault is not the Minister's. It is the fault of the system under which we work. I should have liked to have heard some of the answers to the questions which have been posed by the hon. Members for Mid-Bedfordshire (Mr. Hastings) and Tiverton (Mr. Maxwell-Hyslop) in relation to renegotiations and to what they had to say about the possibility of defective performance, and subsequent contract agreement. However, I am not at all clear that in the present circumstances it is reasonable to ask a Minister to reply to such detailed questions.

If ever there was an argument for the kind of specialist committee that the Parliamentary and Scientific Committee is urging on the Prime Minister, this is it. I should have liked to have seen the Minister and his officials and some distinguished outside experts having to answer the legitimate questions of the hon. Members for Mid-Bedfordshire and Tiverton. I would have liked hon. Members to be in the position of purposeful members of the United States Armed Services Committee.

I think that we all deplore the reasons which have led to the absence of my hon. Friend the Member for Leeds, South (Mr. Merlyn Rees). I wish to put two specific questions to the Minister. First, he will know that my hon. Friend the Member for Leeds, South sent a very long letter to me in answer to the speech I made on 11th May. In the course of the letter there is this passage: The possible escalation of research and development costs, if it were to occur, would be covered by the ceiling price arrangement referred to above. Briefly, what the letter says is this: For the F111A, as the Under-Secretary said in his speech, we have negotiated a ceiling price for the basic aircraft and hope shortly to negotiate a ceiling price for the modifications needed to bring the aircraft to the R.A.F. configuration. These ceiling prices will ensure us against price escalation in every respect except increases in basic wage rates and material costs. The Under-Secretary would not agree that this is something of an open-ended contract. On the contrary, as he said, we have more confidence that prices will not escalate in this case than we have had with any other advanced military aircraft that we have ever ordered in the past. I should like to ask the Minister what evidence there is for this attitude of mind. Or is it perhaps that I misheard what he said about the escalation of research and development costs, because I understood from something he said towards the end of his speech that this was, in fact, not covered by a ceiling.

My second point is again a very specific one and concerns something my hon. Friend said last week on the subject of cancellation: Cancellation is, therefore, only the remotest possibility but certainly by the time we start disbursing significant sums on the aircraft any prospect of a general cancellation will be negligible. But we considered it proper to include in our arrangement with the Americans provision for a proper joint review of the British Government's position even in this remote possibility."—[OFFICIAL REPORT, 11th May, 1966; Vol. 728, c. 539–40.] I wonder whether, this afternoon, the Minister would care to say a little more about the terms of the joint review, even if it is a remote possibility. The possibility may not be quite as remote as some of us may think in 1966.

Mr. Cranley Onslow (Woking)

As the hon. Member for West Lothian (Mr. Dalyell) has mentioned the question of specialist committees, I wish to support his plea. This debate has been carried on with the knowledge that there is other business to which the Committee wishes to proceed. It is unfortunate that this should have been so, because I think that the Treasury Bench must have misjudged the interest that Members have in this subject and the extent to which they want to probe the effects of the Government's policy, even though we are stuck with it.

It is true that the answers given by the Minister are unsatisfactory. Whether this is because he has had inadequate time to research, whether it is because he himself does not know them, whatever the reason may be, the end result is that we have had unsatisfactory answers. We have been left in an unsatisfactory position. This is very unfortunate, because in relation to these contracts and the money which is to be spent under them this is probably the last real opportunity any one of us will have to conduct a searching inquiry into where the money is going—the £430 million to which we are now saying goodbye.

The case for the institution of a system whereby we can criticise the actions of the Minister is made stronger every time we debate matters concerning aviation. It is no good the Minister standing at the Dispatch Box looking like a sad spaniel and telling us that a lot of work has been done but that Members do not appreciate it. We should be told about it when the work is being done. We should be told what is being done. We should not have to ferret around for a brief opportunity to ask the Minister questions and receive half answers. How can the Minister expect to be appreciated? Even if he had the opportunity to deploy all his talents, we might be reluctant to appreciate him to the full, but he does not give us a chance. It is a fundamentally unsatisfactory state of affairs that any searching questions about these aircraft cannot effectively be asked here by Members of Parliament and answered by the Minister of Aviation but can, if we can find a friendly Congressman in the United States, be asked in Washington and be answered.

Mr. Rankin

I want to follow up the point made by my hon. Friend the Member for West Lothian (Mr. Dalyell). I do so because, although there is no sign at the moment of their materialisation, we accept the idea of a specialist committee or specialist committees which could be brought more into the confidence of Ministers than is possible at times in Committee of the whole House.

The Chairman

Order. We really ought not on this Amendment to deal with the question of having specialist committees.

Mr. Rankin

I am simply referring to the question in passing. I am referring to it because at the moment an immense sum of money is at stake. We have been debating this issue for a long while. The hon. Member for Woking (Mr. Onslow) said that £430 million was going away. That is totally wrong. It is not going away. We have not got it to lose. We have not got a penny. As far as I understand it, the £430 million is in the possession of America at the moment and she is going to make us a loan of that money with which to buy her aircraft. We have not got any money to lose. We are going, by and by, to lose it in bits and pieces. The total is not just £430 million, but £660 million.

That is a very important matter, and I am merely pursuing the point which my hon. Friend the Member for West Lothian raised. If we cannot be taken fully into the confidence of Ministers on the disposal of these huge sums, for whatever purposes, at least it might be done under other auspices and, while the specialist committee is, in my view, far ahead at present—

The Chairman

Order. I remind the hon. Gentleman again that we cannot debate the need for specialist committees on this Amendment.

Mr. Rankin

I conclude in this way, then, Sir Eric. There is at present in existence a group, of which I am chairman, the Aviation Group, which might be a little better informed about what is going on in the Ministry than this Committee can be at present.

Question put, That those words be there inserted:—

The Committee divided: Ayes 141, Noes 254.

Division No. 12.]	AYES	[5.31 p.m.
Astor, John	Biffen, John	Brewis, John
Atkins, Humphrey (M't'n & M'd'n)	Biggs-Davison, John	Brinton, Sir Tatton
Baker, W. H. K.	Birch, Rt. Hn. Nigel	Brown, Sir Edward (Bath)
Balniel, Lord	Blaker, Peter	Buchanan-Smith, Alick (Angus, N&M)
Batsford, Brian	Body, Richard	Carlisle, Mark
Bennett, Sir Frederick (Torquay)	Bossom, Sir Clive	Carr, Rt. Hn. Robert
Bennett, Dr. Reginald (Gos. & Fhm)	Boyd-Carpenter, Rt. Hn. John	Channon, H. P. G.
Bessell, Peter	Braine, Bernard	Clegg, Walter
Cooke, Robert	Hordern, Peter	Peel, John
Costain, A. P.	Hornby, Richard	Peyton, John
Crosthwaite-Eyre, Sir Oliver	Howell, David (Guildford)	Pike, Miss Mervyn
Crouch, David	Jenkin, Patrick (Woodford)	Pink, R. Bonner
Cunningham, Sir Knox	Jennings, J. C. (Burton)	Pounder, Rafton
Dalkeith, Earl of	Johnston, Russell (Inverness)	Powell, Rt. Hn. J. Enoch
Dance, James	Jopling, Michael	Ramsden, Rt. Hn. James
Davidson, James (Aberdeenshire, W.)	Joseph, Rt. Hn. Sir Keith	Renton, Rt. Hn. Sir David
Dean, Paul (Somerset, N.)	King, Evelyn (Dorset, S.)	Ridley, Hn. Nicholas
Digby, Simon Wingfield	Kirk, Peter	Rodgers, Sir John (Sevenoaks)
Dodds-Parker, Douglas	Kitson, Timothy	Russell, Sir Ronald
Eden, Sir John	Knight, Mrs. Jill	St. John-Stevas, Norman
Elliot, Capt. Walter (Carshalton)	Lancaster, Col. C. G.	Scott, Nicholas
Errington, Sir Eric	Langford-Holt, Sir John	Sharples, Richard
Eyre, Reginald	Legge-Bourke, Sir Harry	Sinclair, Sir George
Fisher, Nigel	Lloyd, Ian (P'tsm'th, Langstone)	Smith, John
Fletcher-Cooke, Charles	Lloyd, Rt. Hn. Selwyn (Wirral)	Steel, David (Roxburgh)
Forrest, George	Loveys, W. H.	Summers, Sir Spencer
Fortescue, Tim	Lubbock, Eric	Tapsell, Peter
Foster, Sir John	Mackenzie, Alasdair (Ross & Crom'ty)	Taylor, Edward M. (G'gow, Cathcart)
Gilmour, Sir John (Fife, E.)	Maginnis, John E.	Taylor, Frank (Moss Side)
Glover, Sir Douglas	Marten, Neil	Temple, John M.
Goodhart, Philip	Mathew, Robert	Thatcher, Mrs. Margaret
Goodhew, Victor	Maude, Angus	Turton, Rt. Hn. R. H.
Gower, Raymond	Mawby, Ray	Vaughan-Morgan, Rt. Hn. Sir John
Grant, Anthony	Maxwell-Hyslop, R. J.	Vickers, Dame Joan
Griffiths, Eldon (Bury St. Edmunds)	Maydon, Lt.-Cmdr. S. L. C.	Walters, Denis
Grimond, Rt. Hn. J.	Mills, Peter (Torrington)	Ward, Dame Irene
Gurden, Harold	Miscampbell, Norman	Weatherill, Bernard
Hall, John (Wycombe)	Mitchell, David (Basingstoke)	Webster, David
Hall-Davis, A. G. F.	Monro, Hector	Wells, John (Maidstone)
Hamilton, Michael (Salisbury)	More, Jasper	Whitelaw, William
Harrison, Col. Sir Harwood (Eye)	Morrison, Charles (Devizes)	Wilson, Geoffrey (Truro)
Harvey, Sir Arthur Vere	Mott-Radclyffe, Sir Charles	Winstanley, Dr. M. P.
Hastings, Stephen	Munro-Lucas-Tooth, Sir Hugh	Wolrige-Gordon, Patrick
Heald, Rt. Hon. Sir Lionel	Noble, Rt. Hn. Michael	Wood, Rt. Hn. Richard
Heath, Rt. Hn. Edward	Nott, John	Younger, Hn. George
Higgins, Terence L.	Orr-Ewing, Sir Ian
Hirst, Geoffrey	Page, Graham (Crosby)	TELLERS FOR THE AYES:
Holland, Philip	Pardoe, J.	Mr. Pym and Mr. R. W. Elliott.
NOES
Abse, Leo	Coleman, Donald	Fraser, Rt. Hn. Tom (Hamilton)
Allaun, Frank (Salford, E.)	Concannon, J. D.	Freeson, Reginald
Alldritt, Walter	Craddock, George (Bradford, S.)	Galpern, Sir Myer
Allen, Scholefield	Crawshaw, Richard	Gardner, A. J.
Anderson, Donald	Cullen, Mrs. Alice	Garrett, W. E.
Archer, Peter	Dalyell, Tam	Garrow, Alex
Armstrong, Ernest	Davidson, Arthur (Accrington)	Ginsburg, David
Ashley, Jack	Davies, Dr. Ernest (Stretford)	Gordon Walker, Rt. Hn. P. C.
Atkins, Ronald (Preston, N.)	Davies, Harold (Leek)	Gourlay, Harry
Atkinson, Norman (Tottenham)	Davies, Ifor (Gower)	Gray, Dr. Hugh
Bagier, Gordon A. T.	Davies, Robert (Cambridge)	Greenwood, Rt. Hn. Anthony
Barnes, Michael	Dempsey, James	Grey, Charles
Barnett, Joel	Dewar, Donald	Griffiths, David (Rother Valley)
Bence, Cyril	Diamond, Rt. Hn. John	Griffiths, Rt. Hn. James (Lianelly)
Bennett, James (G'gow, Bridgeton)	Dickens, James	Griffiths, Will (Exchange)
Bidwell, Sydney	Dobson, Ray	Hale, Leslie (Oldham, W.)
Binns, John	Doig, Peter	Hamilton, James (Bothwell)
Bishop, E. S.	Dunnett, Jack	Hamilton, William (Fife, W.)
Blackburn, F.	Dunwoody, Mrs. Gwyneth (Exeter)	Hamling, William
Blenkinsop, Arthur	Dunwoody, Dr. John (F'th & C'b'e)	Hannan, William
Boardman, H.	Eadle, Alex	Harper, Joseph
Booth, Albert	Edelman, Maurice	Harrison, Walter (Wakefield)
Boston, Terence	Edwards, Rt. Hn. Ness (Caerphilly)	Haseldine, Norman
Bowden, Rt. Hn. Herbert	Edwards, Robert (Bilston)	Hattersley, Roy
Braddock, Mrs. E. M.	Edwards, William (Merioneth)	Hazell, Bert
Bray, Dr. Jeremy	Ellis, John	Heffer, Eric S.
Brooks, Edwin	Ennals, David	Henig, Stanley
Brown, Rt. Hn. George (Belper)	Ensor, David	Herbison, Rt. Hn. Margaret
Brown, Hugh D. (G'gow, Provan)	Evans, Albert (Islington, S. W.)	Hobden, Dennis (Brighton, K'town)
Brown, Bob (N'c'tle-upon-Tyne, W.)	Evans, Ioan L. (Birm'h'm, Yardley)	Hooley, Frank
Brown, R. W. (Shoreditch & F'bury)	Faulds, Andrew	Howarth, Robert (Bolton, E.)
Buchan, Norman	Fernyhough, E.	Howie, W.
Buchanan, Richard (G'gow, Sp'burn)	Fitch, Alan (Wigan)	Hoy, James
Butler, Herbert (Hackney, C.)	Fitt, Gerald (Belfast, W.)	Hughes, Hector (Aberdeen, N.)
Butler, Mrs. Joyce (Wood Green)	Fletcher, Raymond (Ilkeston)	Hughes, Roy (Newport)
Cant, R. B.	Fletcher, Ted (Darlington)	Hunter, Adam
Carmichael, Neil	Foot, Michael (Ebbw Vale)	Jackson, Colin (B'h'se & Spenb'gh)
Carter-Jones, Lewis	Ford, Ben	Jackson, Peter M. (High Peak)
Castle, Rt. Hn. Barbara	Forrester, John	Jenkins, Hugh (Putney)
Chapman, Donald	Fowler, Gerry	Jenkins, Rt. Hn. Roy (Stechford)
Coe, Denis	Fraser, John (Norwood)	Johnson, Carol (Lewisham, S.)

Johnson, James (K'ston-on-Hull, W.)	Mitchell, R. C. (S'th'pton, Test)	Rowland, Christopher (Meriden)
Jones, Dan (Burnley)	Molloy, William	Rowlands, E. (Cardiff, N.)
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Moonman, Eric	Ryan, John
Jones, J. Idwal (Wrexham)	Morgan, Elystan (Cardinganshire)	Shaw, Arnold (Ilford, S.)
Judd, Frank	Morris, Charles R. (Openshaw)	Sheldon, Robert
Kelley, Richard	Moyle, Roland	Shinwell, Rt. Hn. E.
Kenyon, Clifford	Mulley, Rt. Hn. Frederick	Shore, Peter (Stepney)
Kerr, Mrs. Anne (R'ter & Chatham)	Murray, Albert	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Kerr, Dr. David (W'worth, Central)	Neal, Harold	Silkin, John (Deptford)
Kerr, Russell (Feltham)…	Noel-Baker, Francis (Swindon)	Silverman, Julius (Aston)
Lawson, George	Norwood, Christopher	Slater, Joseph
Leadbitter, Ted	Oakes, Gordon	Small, William
Ledger, Ron	Ogden, Eric	Snow, Julian
Lee, Rt. Hn. Frederick (Newton)	O'Malley, Brian	Spriggs, Leslie
Lee, John (Reading)	Oram, Albert E.	Steele, Thomas (Dunbartonshire, W.)
Lestor, Miss Joan	Orbach, Maurice	Stewart, Rt. Hn. Michael
Lever, L. M. (Ardwick)	Orme, Stanley	Stonehouse, John
Lewis, Arthur (W. Ham, N.)	Oswald, Thomas	Swain, Thomas
Lewis, Ron (Carlisle)	Owen, Dr. David (Plymouth, S'tn)	Symonds, J. B.
Lomas, Kenneth	Owen, Will (Morpeth)	Tinn, James
Loughlin, Charles	Page, Derek (King's Lynn)	Tomney, Frank
Lyon, Alexander W. (York)	Paget, R. T.	Urwin, T. W.
Lyons, Edward (Bradford, E.)	Palmer, Arthur	Varley, Eric G.
Mabon, Dr. J. Dickson	Pannell, Rt. Hn. Charles	Wainwright, Edwin (Dearne Valley)
McCann, John	Park, Trevor	Walker, Harold (Doncaster)
MacDermot, Niall	Pavitt, Laurence	Wallace, George
Macdonald, A. H.	Pearson, Arthur (Pontypridd)	Watkins, David (Consett)
McGuire, Michael	Peart, Rt. Hn. Fred	Wellbeloved, James
McKay, Mrs. Margaret	Perry, Ernest G. (Battersea, S.)	Whitaker, Ben
Mackenzie, Gregor (Rutherglen)	Perry, George H. (Nottingham, S.)	White, Mrs. Eirene
Mackintosh, John P.	Price, Christopher (Perry Barr)	Williams, Alan (Swansea, W.)
Maclennan, Robert	Price, J. T. (Westhoughton)	Williams, Alan Lee (Hornchurch)
McMillan, Tom (Glasgow. C.)	Price, William (Rugby)	Williams, Clifford (Abertillery)
McNamara, J. Kevin	Probert, Arthur	Williams, Mrs. Shirley (Hitchin)
MacPherson, Malcolm	Rankin, John	Willis, George (Edinburgh, E.)
Mahon, Peter (Preston, S.)	Rhodes, Geoffrey	Wilson, William (Coventry, S.)
Mahon, Simon (Bootle)	Richard, Ivor	Winnick, David
Mallalieu, E. L. (Brigg)	Roberts, Albert (Normanton)	Winterbottom, R. E.
Manuel, Archie	Roberts, Gwilym (Bedfordshire, S.)	Woodburn, Rt. Hn. A.
Marquand, David	Robertson, John (Paisley)	Woof, Robert
Marsh, Rt. Hn. Richard	Robinson, W. D. J. (Wath'stow, E.)	Yates, Victor
Mayhew, Christopher	Rodgers, William (Stockton)
Mellish, Robert	Rogers, George	TELLERS FOR THE NOES:
Millan, Bruce	Rose, Paul	Mr. Whitlock and Mr. McBride.
Miller, Dr. M. S.	Ross, Rt. Hn. William

Mr. Emrys Hughes (South Ayrshire)

I beg to move, in page 1, line 16, to leave out "four" and to insert "one".

This is an entirely different kind of Amendment from the one we have just discussed. It is fundamental. Those supporting me are not in favour of spending this very large sum of money on military aircraft to be purchased from the United States. Since there are some new hon. Members present, it might be as well to consider the background of the controversy.

Quite rightly, the Government cancelled the TSR2 project. We entirely supported them in doing so, agreeing that the astronomical cost made it imperative for the Government to reduce this kind of expenditure. The Opposition say that the Government acted wrongly in that they should have continued with the TSR2 and are therefore not justified in ordering military aircraft from America. We, however, take the view that, having cancelled the TSR2, the Government should have carried the matter to the logical conclusion and not bought any military aircraft at all from abroad. This is the vital difference between the Opposition's approach and that which I and some of my hon. Friends take.

If the Government intend to spend £430 million, the Committee is entitled to know exactly what it is for. It is an enormous sum and we are entitled to have it broken down so that we may have an idea of the different kinds of aircraft involved and how much is needed for equipment and spares. I hope that the Government will give us a detailed "shopping list".

We are entitled to ask what these military aircraft are for. What rôle are they to play in the years over which the money is to be spent? What use is a bomber to this country to solve any particular political or international problem at the present time? The F111A is not a conventional bomber. It will carry nuclear weapons—meaning atomic and hydrogen bombs. Some of us think this wrong from many points of view. Hence our opposition to the project.

5.45 p.m

This is not just a matter for technicians and chartered accountants. We are entitled to know how this bombing force will operate but we have yet had no intelligible answer from the Government. Is it to operate in Europe? Are we to use nuclear weapons in Europe? I do not see how the use of a nuclear weapon in Europe will solve any international problems.

This question was posed four years ago by Lord Montgomery in another place, when he said that it was impossible to solve the problem of Berlin by dropping an atom bomb on the city. Nuclear bombs will not solve the problems of Berlin or Germany. We are, therefore, entitled to an idea of what this bombing force will do and how it is to operate. If it is not to do anything, and if it will not operate, we are not justified in calling upon the people to spend such a large sum at the present time on such a force.

At this early stage, the Government's priorities have gone haywire. In the middle of a financial crisis, in which we are told that the £ is in danger and that we must economise and tighten our belts, one of the first Measures of the new Session is a Bill to provide £430 million for the purchase of military aircraft and equipment in America.

Many people would prefer to see that money spent on education, on advance factories, on the modernisation of industry and on hospitals. To use the money for military aircraft means that it will be a burden on the economy and all these desirable things will suffer. In my constituency, we do not know what good we will get from a bombing force bought with this money. This is still an important current controversy. In The Times today, for example, there is a report of a speech by a very well-known admiral.

The argument is based on the assumption that we are going to have some kind of east of Suez strategy. If these aircraft are to be used east of Suez, we are entitled to know something of the circumstances under which they will operate. In The Times today Sir Peter Gretton, a vice-admiral, formerly Fifth Sea Lord, criticises the proposal to operate the F111A aircraft from bases in the Indian Ocean. Sir Peter said in an article in the Royal United Services Institution Journal, quoted in The Times, that deployment of the F111A is based on wishful thinking rather than practical possibilities. The Times says: After studying the Admiralty charts for the area the Admiral concludes that an airstrip at Aldabra would be astronomically expensive and of great inconvenience … If the implication of that is that these aircraft are going to be astronomically expensive then this is a repetition of the procedure which took place when the Conservatives were in power. I do not know where my hon. Friend the Paymaster-General is this afternoon, but I remember the speeches that he used to make criticising the then Government about the waste of money upon aircraft, Blue Streak, Skybolt and the whole list of projects that turned out to be useless for the safety of the nation. One of the last actions of the Labour Party before the Conservative Government fell was to move a Motion of censure upon the Government. We said that they had wasted £20,000 million during their term of office. We have only been in office a few months, but £430 million is a very good instalment.

We are afraid that we are going to see the escalation of costs, the continuation of the arms race and the inability of the Government to remain below the £2,000 million ceiling which they have set themselves. The bombing force cannot operate in Europe: if it ever did, it would be the end of this country. If any of these expensive aircraft ever go into operation there will be immediate retaliation. These are suicide aircraft and we are spending £2,500,000 per aircraft on a suicidal policy. That is one of the premises upon which I base my argument. I do not want the TSR2; I do not want the F111A. I do not want to see this country sink to borrowing money from the United States Government at 4¾ per cent. in order to buy something from the American armament firms which may turn out to be ineffective.

I am fortified in my belief by the opinion of others who understand the strategic ideas behind these projects rather better than I do. I have been reading a book by the military correspondent of the Sunday Times, an eminent authority on military subjects. The Book is called "The Broken Wing". As I have read this my doubts have grown and grown and I cannot conceive that this sum of money can be justified by anyone who thinks out the implications involved. Mr. Divine said that the precise nature of a war in which a first strike of 15 aircraft—even aircraft as sophisticated as the F111—will significantly affect the issue is obscure. He does not know how these aircraft would be employed in any significant way in any future military operation.

Referring to the previous expenditure of the Government, he deals with Blue Streak, which was one of the achievements of the hon. and gallant Gentleman's Government. Mr. Divine says about Blue Streak: It would be unjust to say that with Blue Streak Britain was sold a pup. It might not be unjust to say that Britain bought a pup". Who sold us the pup? The very same people who are now selling us the F111A.

These pups are very expensive if they are going to cost £3 million each. That is as much as it would cost to build a great big technical school, and we are to have 50 of these aircraft. We have heard the word "escalation" and we think that there is a prospect that this Government will do exactly the same thing as the previous Government unless they are strongly criticised in the House.

Mr. Divine goes on to say: The R.A.F.'s standing over what may approximately be called the decade of the F111 may be simply delimited. It is in process of abandoning finally all pretensions to the strategic nuclear rôle. It will provide—since even the Anglo-French Jaguar project will not come to fruition until the very end of it—a diminishing tactical capability resolving eventually into the potential of the truncated Phantom project and the 50 F111s. I do not think that it will be difficultt to translate this military jargon into comprehensive English. Mr. Divine comes to the conclusion that this is not a sound strategic enterprise and that this aircraft cannot take part in European operations. Nor can it take part in operations in Asia. It is difficult to understand how we can justify the size of the Royal Air Force including 88 air marshals, 157 air commodores, 500 group captains and a grand total of 131,300 officers and men. This is the big vested interest behind the idea that we can continue to use manned aircraft in the nuclear age.

6.0 p.m.

The position has been clearly expressed by Mr. McNamara. American strategists say that the missile age has come and that the days of the manned bomber are numbered. Mr. McNamara says that the weapons used in the next war will be inter-continental ballistic weapons carrying nuclear warheads.

Mr. Rankin

On a point of order. May I call attention to the fact that, judging from the appearance of the Tory back benches, hon. Members opposite are no longer interested in military expenditure?

The Deputy Chairman (Mr. Sydney Irving)

That is not a point of order.

Mr. Hughes

I am very much obliged to my hon. Friend for that helpful interruption.

I was about to quote the argument of Mr. McNamara, who says that we have arrived in the missile age in which a large part of the money which we are spending on bombers is unnecessary. It is at this point of time that we propose to enter upon, as one hon. Member opposite has said, a decade of using these aircraft. Long before the decade is over and before they are paid for they will be obsolete. I object to paying interest to American armaments firms long after the life of usefulness of a product which they have supplied to us.

Of course, we will have to pay the Americans. One great idea in helping to pay the Americans is that we shall make money out of armaments. Therefore, an arms salesman has been appointed who will compete with our friends the Americans in selling arms. This will inevitably increase the tension throughout the world. It will increase the arms race. We are committed to this in a very irresponsible way.

Some interesting facts about the F111 have been given in the Daily Express. There have been news items and reports from the Congressional Record in America which throw doubt on whether this plane can fulfil the rôle expected of it. There have been three articles in the Daily Express which filled me with considerable alarm. The air reporter gave evidence which cannot be ignored, to the effect that there are doubts in America that the F111A will fulfil its requirements. He says that these planes, which are to be stationed east of Suez, can carry nuclear warheads as far as Canton, but not as far as Peking. This is an alarming prospect. We are thinking in terms of atomic war with China. Is that the purpose of the strategy in the Far East? Is that what these F111A aircraft are for? Are we contemplating a nuclear war with China? I do not believe that the people of this country want a nuclear war with China.

When these prospects are held out to me, I wonder what is likely to happen in that part of the world during the next five of ten years. Therefore, the less we go in for this problematical east of Suez policy the better. If we proceed with it we cannot say that we are leading the world to a new civilisation. The possession of bombers and sophisticated aircraft does not mean that a nation accomplishes anything with them. Look at what is happening in Vietnam. The Americans have enormous numbers of aircraft in Vietnam. They can bomb and bomb and bomb, but they cannot solve the problem of Vietnam. I do not believe that we can contribute to the solution of any problem in the Far East by purchasing American aircraft, however powerful they may be.

At the beginning of the life of a new Government, we are embarking on an armaments programme involving a large expenditure of money on aircraft—money which we cannot afford, money which is needed it home, money which is needed to improve our industry. This may be an historic debate. I remember the debates on Blue Streak when Ministers assured us that it was a splendid weapon, that it was the kind of weapon we needed and that it could fulfil its requirement. A few years afterwards a Front Bench spokesman of the Labour Party said that the Conservative Government had deluded the country. We tabled an Amendment to the effect that the Conservative Government had wasted £20,000 million.

This may seem an insignificant debate, but it is an ominous debate. This policy continues tension throughout Europe and the world; it increases the arms race. If the Labour Government allow the arms race to go on, the same thing will happen to them as happened to the Government of 1951, when we started the great armaments programme. I was here when we started that programme. The hon. Member for Bosworth (Mr. Wyatt) then defended the policy of embarking on the rearmament programme.

The Deputy Chairman

I hesitate to intervene, but the hon. Gentleman is getting wide of the Amendment. His argument seems to be directed not to reducing expenditure but to cutting it out altogether. Will he address himself a little more precisely to the Amendment?

Mr. Hughes

I am pointing out that we made mistakes like this before and that we should not make them again. I thought that that was relevant to my argument. We have had before assurances similar to those which we have had recently. This is an illustration of the futility of armaments and rearming. I remember the hon. Member for Bosworth saying, "We must spend this money this year and then in three years we will sit down and talk with the Russians from a position of strength." What has happened is that the arms race has gone on all these years. It is continuing. I want the Labour Government to do something to stop it, but they are not doing that with this Bill.

Mr. W. Baxter

I congratulate my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) on a very powerful, sensible and moving speech. I do not want to comment on his remarks, but I should like to direct attention to the fact that the Minister has still not answered the questions which I asked some time ago. There is another one which I should like to ask about the interest rate, which is laid down at 4¾ per cent. to be paid over roughly 10 years. I am told that the interest alone will amount to about £250 million, but I should like confirmation of this from the Minister, because it has a great bearing on the Committee's attitude to this project.

Mr. Mulley

I will again try to give the information that my hon. Friends have asked for, although all this information has been given many times before. My hon. Friend the Member for West Stirlingshire (Mr. W. Baxter) asked me, and was indignant, because I did not again go over the interest rate. He clearly showed, in his more recent intervention, that he was well aware of the fact that the interest rate has been published many times, and is 4¾ per cent. As a matter of arithmetic, he will—although I do not hold it against him that he is no good at arithmetic, as I am no good at it myself—find that that could not possibly amount to £250 million on £430 million. I will give him the exact sum.

Mr. W. Baxter

I want to know how much we have to pay.

Mr. Mulley

I am just coming to this. To put forward the idea that one could possibly, over 10 years, pay £250 million on a loan of £430 million is wrong, because it is a matter of arithmetic that the actual sum over the 10-year period—although it is a matter more for the Treasury than for me—is £90 million in interest.

I now turn to the point of how the £430 million is broken down as between the various aircraft. Just over half—about £230 million—will be borrowed on account of the Phantom aircraft; about £140 million for the F111A; and about £60 million for the C130. I hope this satisfies my hon. Friend as to the information he wants, but if at any time he cares to write to me or to my right hon. and hon. Friends in the Ministry of Defence we shall seek to give him the information, provided that there are no security restrictions on it.

Throughout the debate—I do not criticise them unduly, but I did find it a little nauseating—hon. Members opposite have complained that they were never given any information, not even the numbers or price of the planes to be bought. Hon. Members opposite complain that it is unsatisfactory that I am not prepared here and now to have a public discussion about operational requirements of aircraft. When the time comes that we can have public discussions about all the intimate details of operational requirements and equipment that the Royal Air Force will use, then it may well be that we have the kind of situation for which my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) was pleading, when we would not need any aircraft at all.

I do not think that my hon. Friend will hold it against me when I say that I have heard this theme from him before. There were one or two new variations today, but I have never heard him so eloquent in quoting admirals and military correspondents in his support. I have never heard him as enthusiastic about the Daily Express, but if, as I dare say, he is a regular reader of that newspaper, and has so far found only three articles to cause him concern and anxiety, then he probably reads the Daily Express less carefully than I do, because over the years more than three articles have caused me a great deal of concern and anxiety.

I congratulate my hon. Friend on his increasing moderation with the years. When I entered the House, 16 years ago, I should not have thought that I should see him sponsoring an Amendment the effect of which is to recommend to the House of Commons that we spend £130 million on military aircraft. This, in fact, is the effect of my hon. Friend's proposals.

Mr. Emrys Hughes

I am sorry to destroy my right hon. Friend's arguments, but it is civil aircraft—I am prepared to allow the money for civil aircraft.

Mr. Mulley

I understand that my hon. Friend has an Amendment on the Notice Paper about civil aircraft instead of military, but I have to judge it as it stands and I do not even know whether he will move that Amendment.

Mr. Hughes

It is not to be called.

Mr. Mulley

If he is not going to move an Amendment to change "military" to "civil", if he is recommending, as presumably he does in moving his Amendment, that the Committee should accept it, the effect of his Amendment would he that he is publicly sponsoring the borrowing of £130 million for the purpose of buying military aircraft—

Mr. Hughes

No.

Mr. Mulley

—and I congratulate my hon. Friend on his improving moderation over the years. No doubt we shall get closer together as the years go by.

In short, the effect of my hon. Friend's Amendment would be—and I am sure he would from a personal point of view think this was the better alternative—that either we buy fewer aircraft or we go through with the aircraft programme. The purpose of the Bill is to give authority for the money to be borrowed. It is not, as so many hon. Members in the course of the debate have rather implied, that we are voting or approving expenditure in the same way as when the House has before it the Defence Estimates. We are approving the principle of the programme in the fact that we are authorising the Treasury to borrow the money.

6.15 p.m.

If the sum to be borrowed were reduced, and we went ahead with the programme, it would mean we had to find immediately, much sooner than we intended, the £300 million that my hon. Friend would delete from the Bill. This would throw an additional burden on the balance of payments, at a time when we are all concerned about the future trend of the balance of payments, and no hon. Member in any part of the Committee would wish that.

I hope that my hon. Friend, on reflection, will seek leave to withdraw his Amendment, particularly if, as I understand, he is not moving the subsequent one.

Mr. Eric S. Heffer (Liverpool, Walton)

I do not want to take up the time of the Committee, but there are one or two points I should like to make. My right hon. Friend the Minister said that he had heard this theme from my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) many times before and that on this occasion there was merely a slight variation, or a number of variations, to the theme. The fact that we have had this theme in the House before in no way diminishes the importance of the points made by my hon. Friend. Because there have been lone voices crying in the wilderness over the years, demanding cuts in military expenditure and expenditure on aircraft for military purposes, that does not mean that those voices have been wrong.

I want to emphasise this point, because we have the first Government in history with a Minister of Disarmament, which shows that we as a Government are equally concerned with this question of cutting down military expenditure. I find it a little difficult to understand how we can have a Minister of Disarmament, concerned with getting an all- round cut in military expenditure throughout the world, while, at the same time, we are discussing borrowing such vast sums of money to buy military aircraft from the United States of America.

Mr. John Hall

Perhaps I can explain this seeming contradiction by pointing out that this is the first Government to have a super arms salesman, too.

Mr. Heffer

This makes the position even worse. It makes the contradiction almost impossible to understand. I am not defending the idea of a super arms salesman. It seems that we are getting ourselves tied up in knots on this question of military expenditure. We have a Defence Review, which rightly points out the necessity for keeping our arms expenditure to a reasonable level. At the same time, we have these contradictory situations.

My hon. Friend the Member for West Stirlingshire (Mr. W. Baxter) has asked how much we would be paying out in interest over a period of 10 years. We shall be paying out to the Americans £90 million. In the sort of sums that we discuss in the House of Commons, that is not a great deal of money, but £90 million could practically solve our housing problems. We need housing, we need schools, we need roads. We need the £90 million here in this country and we do not need it on the type of military aircraft that we are to purchase from the United States of America.

I am not a pacifist. I would not go the whole way with my hon. Friend the Member for South Ayrshire, who has, over the years, very honestly and courageously stood up in the House of Commons and fought against the whole principle of any arms for any reason at all. I am not a pacifist. I spent my war years in the Royal Air Force. I am not ashamed of that. I am rather proud of the small part which I played in that great struggle.

I believe, therefore, that we have to defend our country. I believe it to be necessary to have armaments, but I do not consider it essential that we must spend these vast sums that we are spending on, in some cases, aircraft which have become obsolete even before we have purchased them. This, surely, is a ridiculous situation.

I end on this note about the whole concept of east of Suez, for which we shall be requiring these aircraft. Surely, the time has come when we have to get rid of those bases east of Suez. We must have a new attitude to this question. We do not have to continue to argue that we have the need for a special presence, for Britain being the policeman of the world. Those days are past and gone. The quicker we recognise that, the better for this country and the quicker we shall be able to solve our balance of payments problem.

With this plea, I add my voice to the great speech which has been made this afternoon by my hon. Friend the Member for South Ayrshire.

Mr. Emrys Hughes

I should like to deal shortly with a technical point made by the Minister about the sum by which I have tried to reduce the amount to be voted. If I had not been able to put down these words, I would not have been able to move the Amendment. We have to keep these technical points in mind before we put our case. I consulted my hon. Friend the Member for Glasgow, Govan (Mr. Rankin), who, I believe, is chairman of the Labour Party group on aircraft, to ask him about this very large sum of money which was included as a lump sum, and my hon. Friend said, "You cannot oppose all of that because there are civil aircraft in it." I do not want to oppose civil aircraft. The Minister must recognise this compromise. It is quite true that he has heard the theme of my speech before, and it is quite true that he will hear it again.

Amendment negatived.

Mr. Emrys Hughes

I beg to move, in page 2, line 5, to leave out from "equipment" to the end of line 7.

I can save the time of the Committee if I explain that what I want to know is whether the words after "equipment" mean that in this sum we are paying for any re-equipment for missiles for the Polaris base.

Mr. Mulley

I am glad that my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) has explained the point of his probing Amendment. I was a little puzzled when I first saw it. The only reason why we have included development and training costs, and so on, is for articles associated with the aircraft programme. We did not want to have technical arguments about whether certain technical publications connected with the aircraft were or were not equipment. We therefore used this rather wider form of words.

I give my hon. Friend the assurance that none of this loan is to be expended on money for the Polaris submarine base.

Mr. Emrys Hughes

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

Mr. R. Carr

I would like to ask two questions. I am sure that the Committee will forgive me if, before putting them, I say, on behalf of all my hon. Friends on this side, how sorry we are to learn of the reason for the absence from our debate today of the Under-Secretary of State for Defence for the Royal Air Force. We did not know of this until the Minister mentioned it in reply to an Amendment.

It would help us on this side if the Government could reply to two questions which arose on Second Reading last week. We are in a little state of confusion about the monetary side of the Bill. The Bill asks for borrowing powers to the total sum of £430 million. We know, however, from information given to the House—and it has been referred to again today—that the total dollar cost of the programme of purchases of American aeroplanes to which the Government are committed is £660 million, or £230 million more than the sum involved in the Bill.

We are not clear how the £430 million is made up and why more of the £660 million is not included. We do not know whether it is because the remainder does not qualify under the United States Government's arrangements, or whether, for some reason, our Government would not wish to borrow more than £430 million. It would help us if we could have a reply about this.

Secondly, we are still in a state of confusion about the point of criticism made by the Select Committee of Estimates, to which I referred on Second Reading. On that occasion, I quoted from paragraph 20 of the Select Committee's Report, which criticised the Government for having been slow in introducing the Bill and which reported to the House that the effect of this slowness was to place on our balance of payments a burden of £22 million worth of dollars which otherwise need not have been carried as a burden On our balance of payments had the Government moved with greater expedition.

We thought that we understood the position last week, but the Government said that the Select Committee of Estimates was wrong in that criticism. But it is a rather complicated matter, and we are not sure whether we understand the position accurately. Here again, before allowing the Clause to stand part of the Bill, we would like elucidation on the point.

6.30 p.m.

The Chief Secretary to the Treasury (Mr. John Diamond)

I am happy to reply to the very reasonable questions put to me by the right hon. Member for Mitcham (Mr. R. Carr).

Dealing with his first question, as the figure of £660 million is clearly in everyone's mind, may I go back to the question to which the £660 million was the answer. because that in itself removes some of the assumptions which are perhaps misconceived.

It was a Question put to my right hon. Friend the Secretary of State for Defence and answered in columns 396 and 397 of HANSARD on 4th March of this year. The Question asked was: … what is the total estimated cost to this country, in dollars and sterling, respectively, of the F111A force, the Phantom force for the Royal Navy and the Royal Air Force and the Hercules force, over a ten-year period"— that is one condition to which I draw attention— including initial purchase price, spares replacements"— which is another condition to which I draw attention— 'the United Kingdom contribution to United States research and development costs, running costs, and all interest payable as a result of the credit terms arranged for payment. If I may give the figures in a way which will be easily digested by the Committee, talking about cost for the moment, the original cost was £450 million. That original cost covered original spares, but did not cover spares replacements. There is an odd £2 million on the spares replacements figure, but I should confuse the Committee if I brought that in. The spares replacements in round figures were £140 million, payable in cash. Interest payments payable in cash as the interest accrues are £90 million. So there is a total of £680 million.

The £230 million about which the right hon. Gentleman asked me is simply those two—figuresreplacement spares, £140 million, and interest, £90 million, total £230 million—added on to the original cost of £450 million, bringing the full cost to £680 million. That is not the full cost over the 10 years, but the full cost.

The right hon. Gentleman asks me to explain the borrowing in cash payments over 10 years. The position is as follows. There is the £430 million to be borrowed under the Bill, to which we must add a round £20 million—and the right hon. Gentleman has been good enough to accept the roundness—already paid under previous powers which I will deal with more explicitly. That makes a total of £450 million. There are the further payments that we have mentioned totalling altogether £680 million, of which £660 million is payable in the first 10 years and a further £20 million after the expiry of 10 years.

I hope that I have satisfied the right hon. Gentleman on the arithmetic of the £660 million. The full answer is £680 million, including, naturally, a spot more interest in the period after the 10 years.

The right hon. Gentleman went on to say that it is not like a Select Committee to misunderstand the circumstances, and he asked me to explain the apparent inconsistency between the Report of the Select Committee and what I said. First of all, as to the arithmetic again, the £22.5 million at that point of time was an estimate and is the round figure of £20 million which has been accepted for the purposes of clarity. That figure reflects payments which were in the course of being made during the last financial year in respect of contracts entered into, one of them entered into by the previous Administration.

As the Select Committee rightly pointed out, that was at a time when balance of payments difficulties are acute". They were acute during that period. But the whole of that £20 million has, in effect, been refunded, because, under its borowing powers, the Treasury borrowed that sum of money for that year which covered those payments. To be precise, it was a line of credit which was not to exceed 52 million dollars. The agreement was presented to Parliament in April of this year (Command 2982), and that was the machinery by which the payments made in that first year were recovered. So that there was no net cost to the balance of payments during that year.

That is a matter which is of concern to the Treasury, just as much as it is to the Select Committee, and I am grateful to the right hon. and hon. Gentlemen opposite for raising it.

To be set against that, there was the fact that some of this money was out of the Treasury for a period—some for a few months and some for a very short period—before the borrowing was made. If we had attempted to prevent a single penny going out in that way and had borrowed before a dollar was expended, we should have had to come to the House with legislation for an indefinite amount, because the present legislation gives borrowing powers to cover a purchase of planes which was an integral part of the Defence Review, and that was settled in February and presented to the House at the end of that month.

We had to set the small cost of being out of one's money for a short time against having two Bills and occupying the time of the House in considering two Bills, and the unsatisfactory nature of presenting a Bill with an imprecise amount or the much more unsatisfactory nature of asking the House to give the Treasury permission, on a Bill for a small amount, to add an additional amount by an affirmative Order.

We took the view that, on overall costs, we would be much better served by borrowing the sum under our normal borrowing powers and seeking power by legislation to borrow the balance of £430 million. The effect of that has been that the Votes on the first year could not be relieved by appropriations in aid to the extent of that £20 million, and therefore they bear the full cost. In future years, these Votes will be relieved.

I regret to say that the hon. Member for Woking (Mr. Onslow) has misunderstood the point of the Bill. He said that we are saying goodbye to the right to examine this expenditure. The whole purpose of my standing here as a Treasury Minister is to make sure that the House has an opportunity each year of debating the expenditure that is being incurred direct by the American Government, through its Defence Department, to the contractor, and to make sure that each year the House has the same right of debating, criticising and voting or not voting the Supply as it would have had had the money not been borrowed but met through Votes in the ordinary way each year.

Mr. Onslow

The Minister of Aviation has told us that they had agreed the principle, and it is still the case, I feel, that we are now embarking upon it before many genuine doubts felt on both sides have been resolved. That was the principal point that I wanted to make.

Mr. Diamond

We are in this technical difficulty. This is a new Parliament, and nothing that was said time and time again in the old Parliament has ever been said, and it will have to be said over again. I do not think that the hon. Member for Woking would take that point, because he himself is not a new Member. All these matters of the contract and the policy were debated at length. What we are debating today is the borrowing powers. I hope, therefore, that I have satisfied the right hon. Gentleman on the two points he made and that the Clause can now be passed.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 2 and 3 ordered to stand part of the Bill.

Bill reported, without Amendment read the Third time and passed.