HC Deb 13 December 1967 vol 756 cc404-7
10. Mr. William Hamilton

asked the Secretary of State for Defence what is the estimated additional cost of the purchase of military aircraft from the United States of America consequent on devaluation; and whether, in the new circumstances, he will seek to cancel all these orders.

12. Mr. Goodhew

asked the Secretary of State for Defence what is the additional cost in sterling of military aircraft ordered from the United States of America since October 1964, arising out of the devaluation of the £ sterling.

24. Sir G. Nabarro

asked the Secretary of State for Defence following devaluation of the £ sterling and additional costs of buying foreign aircraft and defence equipment, whether he will cancel all outstanding orders and buy British equipment alone, including resuscitation of the TSR2 on account of its much cheaper cost post-devaluation than F111 United States aircraft.

78. Mr. Cordle

asked the Secretary of Slate for Defence what will be the extra cost of the United States aircraft on order due to devaluation.

92. Mr. Goodhart

asked the Secretary of State for Defence what increase there has been to the cost in sterling of military aircraft ordered from the United States of America following the devaluation of sterling.

Mr. Mason

The net budgetary addition to the continuing aircraft programme will be about £10 million a year. Because of the F111 offset arrangement, only about two-thirds of this represents additional foreign exchange costs.

Mr. Hamilton

Why does not my hon. Friend the Minister of Defence delight the international bankers by cutting public expenditure in the defence field and do it by cancelling these orders, because the need for these aircraft is very problematical indeed?

Mr. Mason

These agreements have been entered into. They concern the Hercules, which are now coming to this country; the Phantoms, which are coming next year; and the F111, on which we have got a particularly good offset agreement. These aircraft are operationally required, anyway, for our rôle in Europe.

Mr. Goodhew

For how many years will this £10 million apply? Will not the hon. Gentleman agree now that it was a great error on the part of the Labour Government to destroy the TSR2 and that these figures would make even the Secretary of State's bogus figures look silly?

Mr. Mason

That is ridiculously absurd, because we are getting the 50 F111s at half the price we should have paid for the TSR2s.

Sir G. Nabarro

Is the Minister of Defence for Equipment aware of the sense of outrage felt by British exporters today who are bursting their boilers to earn foreign exchange by selling hard in the United States of America in order that his Ministry can dissipate their hard-won funds by buying American aircraft which we could build here in the first place anyway?

Mr. Mason

That is another ridiculously absurd proposition. Because we cancelled the strike reconnaissance programme of the Tory Administration— that was the P1154, the HS681 and the TSR2— we saved £1,200 million on their planned programme.

Mr. Barnett

Would my hon. Friend like to comment on the nonsense of the offset agreement in so far as we are proposing to use productive resources to pay for planes which we do not need?

Mr. Mason

The offset agreement has already excited hundreds of British firms, has managed to get 40 major contracts in 17 towns in Britain, and is earning valuable dollars at the same time.

Mr. Ramsden

To what extent are the contracts relating to the offset purchases written in sterling and to what extent in dollars, because this obviously makes a difference to the final cost?

Mr. Mason

It is very difficult to work this out. This is one of the reasons why we keep saying to the right hon. Gentleman and to hon. Members opposite that it is not possible, because of devaluation, to work all this out so very quickly. Many of the aircraft that we are buying from abroad have got British equipment in them and it is difficult at this moment of time to work out what is the sterling content of all the contracts as distinct from the dollar content as well.

Mr. Ramsden

If it cannot be worked out, how can the Government give the House a figure as to the final cost?

Mr. Mason

This is being worked out on the individual contracts— the F111, the Hercules, the Phantom, and the Polaris submarine.