MALTA

HC Deb 02 February 1967 vol 740 cc807-82

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Whitlock.]

4.48 p.m.

The Minister of State, Commonwealth Affairs (Mrs. Judith Hart)

It is clearly right that the House should have a full discussion on the situation in Malta at this moment, for there can he no Member of the House on either side who does not feel deeply concerned. Here is this proud island, with its George Cross—

Sir William Teeling (Brighton, Pavilion)

On a point of order. Mr. Speaker, may I have your guidance? This debate was supposed to start at 3.30 and go on until 7 o'clock. May we be told whether we are to go on later than 7 o'clock? I ask that because many of us would like to speak in this debate.

Mr. Speaker

I am afraid that that is not a matter for Mr. Speaker at all.

Mrs. Hart

I think that perhaps the hon. Gentleman did not hear my right hon. Friend the Leader of the House say that we should have to see how things went. He will no doubt be observing how things go.

Mr. Jeremy Thorpe (Devon, North)

Surely we know now how things have gone; they have gone very slowly. Would it be in order to ask the Leader of the House to be recalled, so that the feeling of hon. and right hon. Members on both sides of the House that there should be adequate time for debate could be met?

Mr. Speaker

That is not a point of order for me.

Sir W. Teeling

May I repeat my question to the right hon. Gentleman, who has returned? We were told that the debate was to start at 3.30 and go on until 7 p.m. The hon. Lady has now told us that the right hon. Gentleman said that he would see how things were going. It is now ten minutes to Five, and we have only about two hours left, until 7 o'clock. Many hon. Members wish to speak in the debate. May I ask the right hon. Gentleman for how long we can go on?

The Lord President of the Council and Leader of the House of Commons (Mr. Richard Crossman)

I suggest that we should go on until 8 o'clock.

Mrs. Hart

As I was saying, we have before us a situation in which the island of Malta, with its very deep and close relationship with Britain, with its George Cross, and all its history, is considerably affected by the decisions of the British Government. There are questions to be asked and answered. I shall try to explain the position we have now reached, the reasons behind the actions which the Government have taken, the steps we have taken to consult the Government of Malta, and the measures we have proposed to help Malta to meet its problems. I shall be as brief as I can, for I know that many hon. Members are intensely anxious to take part in the debate and how little time we have.

First, I want to consider the context within which we should form our judgments about the Government's actions, remembering all the time that we are talking about people—the men and the women of Malta who have jobs or who do not have jobs, who have security or do not have security, who earn a decent wage or do not earn a decent wage—and we are talking about people in this country whose long-term interests it is the duty of any Government to serve.

It is a firm decision of this Government that overseas defence expenditure must be reduced as rapidly as possible compatible with our responsibilities and obligations to our allies in the world. Our reductions in Malta do not affect our ability to carry out our commitments for the defence of Malta. I shall say more about this later. Only by cutting defence expenditure, very much of which is spending overseas, can we create a viable and healthy balance of payments; only by cutting defence expenditure can we achieve the budgetary savings to spend more on the social needs of our people—whether for houses, for schools, for hospitals, for social security benefits, and only be cutting defence expenditure can we succeed in diverting more of the real resources of Britain to social needs.

Further, only by cutting defence expenditure can we create a base line for increasing overseas aid, for before we can spend more on helping the developing countries—and they desperately need every penny we can give them—we must have a healthy economy and a healthy balance of payments. Yet the paradox is that in order to achieve this we must reduce the level of our forces overseas, and our military presence is often a major source of employment and prosperity to the very people who need the economic assistance which overseas aid can provide

It is a fundamental dilemma, but we accept our responsibility to do all that we possibly can, consistent with that policy, to minimise the inevitably unpleasant consequences which may face these economies in which our military presence has played a key rôle. I am utterly certain that this policy is right not only for Britain but, in the long term, right for the countries of the Commonwealth who need our help.

That is the context of the problem that we face today—Malta's problem. Understanding it as we did—and as we do—how did we proceed? Did we suddenly and sharply inform the Malta Government of our intentions? Did we fail to consult the Malta Government? Did we ride roughshod over the Malta Government s views? I want to give an outline history of events in order to demonstrate that this was not so. In August of last year my noble Friend the Under-Secretary of State initiated consultations with the Malta Government and presented proposals which would, in effect, have reduced our forces in Malta to the levels contemplated in the Defence Review by 1968. He had four days of talks with Maltese Ministers. When he returned he reported to my right hon. Friend and his colleagues the strong representations which had been made to him by the Malta Government, during his discussions, about the economic differences, and in particular unemployment, which they foresaw would be created for them by the reductions we proposed.

In September Dr. Borg Olivier had personal discussions in London with my right hon. Friend the Prime Minister. Those discussions naturally went in depth and detail into the matter. As a result of my noble Friend's report and my right hon. Friend's discussions we looked again very carefully at the Malta run-down and substantially revised our original proposals. The revisions involved considerable additional cost to ourselves. A major item of the revised proposals was that the departure of our two infantry battalions would be deferred for two years, until 1970. Together with other changes in our proposals this meant preserving 2,000 more jobs for the Maltese and spending £5 million more than our original proposals would have envisaged. Under the revised proposals there would have been a phased withdrawal over a period of four years. At the end of four years we should still be employing roughly 3,000 Maltese people, and spending almost £6 million a year on defence for Malta.

It was these revised proposals, representing a substantial and, for Malta, a very helpful change from the original proposals which my noble Friend took to Malta last August, which formed the basis of further consultations two weeks ago. My right hon. Friend the Commonwealth Secretary took the new proposals with him when he went to Malta to discuss them with the Malta Government. In talks with the Maltese Government at the time my right hon. Friend stressed how seriously we had considered their representations about the real economic problems that our proposed reduction of forces would involve. He discussed the whole thing with them and when he returned he reported to the Cabinet which, in the light of his consultations with the Malta Government, took its final decision —not an easy one.

Mr. John Hall (Wycombe)

Is it not a fact that the right hon. Gentleman announced these proposals before he had reopened negotiations with the Malta Government, and that he made it quite clear that these proposals were not debatable and were, in fact, a diktat?

Mrs. Hart

My right hon. Friend went to Malta with proposals that represented very substantial changes from the original ones, and which represented the outcome of all the discussions that had taken place between August and January. He went out and discussed further the new proposals that he had brought with him with the Malta Government. [HON. MEMBERS "Answer the question."] All I am saying is that the process of consultation inevitably, at the end of the day, involves communicating to people what the result of the consultation has been. The point is that consultations went on at the very highest level for a considerable period. As a result of those consultations our decisions were changed and modified, with great benefit to Malta. I do not think that any hon. Member could sustain the argument that, all this having occurred over a period of five months, it did not represent genuine consultation.

I assure the hon. Member that if the Malta Government felt that this revision was not enough to satisfy them it was nevertheless a sincere and genuine effort on our part to do so.

Mr. John Hall

The Minister has not answered my question. I said: is it not a fact that the right hon. Gentleman announced these new proposals—the reworked proposals—before he had started fresh consultations with the Malta Government, and made it quite clear, before he reopened those consultations, that this was the final offer and that it could not be debated?

Mrs. Hart

The weekend after the consultations, my right hon. Friend the Commonwealth Secretary gave a Press conference covering these points. I assure the hon. Member that many points of real substance were discussed between my right hon. Friend and the Malta Government during his visit. I must insist that in the light of all this, the Government believe that consultations with the Malta Government, in accordance with their obligations under the Defence Agreement, have been complete and genuine.

Mr. Nigel Fisher (Surbiton)

I would not have interrupted, but the hon. Lady has not been completely accurate. I hold in my hand a copy of a Malta newspaper reporting the Secretary of State's arrival at Malta Airport before he had seen the Prime Minister or any Ministers. The headline is: No room for bargaining, warns Bowden". The text is: 'I am afraid there is no room for bargaining on any major points', said Mr. Bowden". That was before he saw the Prime Minister. He told the Press at the airport that he could not bargain about any- thing. This is resented in Malta, because that is not thought to be consultation. It is thought to be informing them. I would not have pursued this matter, but the hon. Lady gave a different impression.

Mrs. Hart

From what I have said, the House will recognise, as a statement of pure fact, that five months' consultation took place. Original proposals were taken to Malta by my noble Friend the Under-Secretary of State. He listened to all that the Malta Government had to say. He came back and put those representations to Ministers here. My right hon. Friend the Prime Minister had full discussions with the Prime Minister of Malta here in September, as a result of which substantial changes were made in the proposals.

When in January my right hon. Friend went to Malta with the new proposals, there were still consequential matters to be discussed—I will give the hon. Gentleman that—based on the level and pace of the run-down, which, it had then been decided, would be our last possible move. There were a number of consequential matters dealing with the way in which we could help Malta, and we discussed those. Those matters were part of the consultations.

Hon. Members are not being just if they seek to allege that this process, covering such a period and involving changes in what the Government proposed to do, did not represent genuine consultations. We must insist that it did.

I must now turn to another point, or I will be reducing the time for hon. Members to speak. I turn to the question of helping Malta to meet the economic situation which she will face. Throughout our consultations with the Malta Government, we have made it clear that we want to do whatever we can in co-operation with the Government of Malta. There is much that can be done —for example, making real progress on the problem of the dockyard; establishing a development corporation as a matter of urgency, and possibly some improvement in the effective use of the aid we make available under the Financial Agreement.

The creation of a viable independent economy is what Malta wants, and is what we want for her. We have helped, we are helping, and we shall continue to help her very substantially to do just this through our aid programme. As hon. Members will know, our aid to Malta per head of her population is almost our highest to any country in the world. Let me give an example. We give 1s. 4d. per head to India, with all her poverty and hunger. We give £5 7s. per head to the dependent territories of the Pacific, starved as many of them are of natural resources. To Malta we give £18 per head.

Article 2 of the Financial Agreement provides that a sum not exceeding in total £31.2 million shall be made available for the seven years beginning 1st April, 1967. None of the £1 million available under Article 7 of the Agreement has been drawn, so that this is also available. Assuming an even rate of disbursement over the seven-year period, the annual availability will be £4.6 million or £18.4 million over the run-down period, giving an estimated total availability over the four years of £19.74 million. In the last 10 years Malta has received from the British Government nearly £56 million. This is not ungenerous.

Nevertheless, it had been suggested that to compensate for the run-down we should offer an even higher level of development aid, particularly during the next two years. This may seem an obviously attractive solution, but let us be clear. On the one hand, at present we could give further aid to Malta only by depriving some other nation. That is one factor. The other is that the Malta Government have themselves said that they could not absorb further financial aid quickly enough to counteract the effects of the run-down.

Nevertheless, there are a number of measures which we think could usefully be taken to help Malta achieve an independently viable economy. For instance, we have offered the Malta Government expert assistance in dealing with economic problems arising from the run-down. We are urgently considering the possibility of providing Malta with sources of employment for the Maltese people in the British Armed Services or Civil Service. We have offered to set up a Joint Steering committee or Working Party before the run-down gathers momentum, to see how we could help further. I have already said enough to show that we completely understand the concern of the Malta Government at the economic impact of the reduction of our Forces, and the need to develop alternative sources of employment.

In a fresh attempt to reach an acceptable outcome from the present difficult situation, Her Majesty's Government have today proposed to Dr. Borg Olivier that we should send out a high-powered team of industrialists to advise on how the industrial phase of Malta's economy could be radically and urgently strengthened, and how new employment could be injected—the mission to report back to both the Malta Government and to us. If, as we hope, the Malta Government feel that this would be a useful step to take—and I hope they will—we would be ready to organise such a mission from here as a matter of great urgency.

We believe that a mission of this sort, coupled with the other measures I have already outlined, will go far to enable Malta to grapple successfully with the problems arising from the run-down. I assure the House that we have done everything that lies within our power to help, consistent with our firm decision to reduce the level of our forces in Malta.

I turn now to the other principal feature of the present tension which has arisen between ourselves and the Malta Government—namely, the assertion by the Malta Government that by the proposed reduction of our forces in Malta we place ourselves in breach of the Defence Agreement.

The Malta Government base themselves on the argument that by these reductions we render ourselves unable to defend Malta in accordance with Article 2 of the Defence Agreement. On the basis of this assertion, the Malta Government have, regrettably, informed us that they regard us as being in forfeit of all our rights and privileges under the Defence Agreement. The Prime Minister of Malta yesterday moved the Second Reading of Amendments to the Visiting Forces Act of 1966; and, indeed, during the past few days several administrative measures have been put in hand by the Malta Government which would make the position of our forces in Malta virtually untenable if they continued.

The Malta Government have sent to us an aide memoire informing us of their decision, and calling on us forthwith to take the necessary steps to cease making use of the rights, privileges and facilities afforded to us in terms of the Visiting Forces Act.

My right hon. Friend the Secretary of State for Defence will be dealing with these aspects of the problem in more detail later in the debate, as they are primarily his concern.

I must make it quite clear to the House—as it has already been made clear to the Malta Government—that Her Majesty's Government cannot accept the Malta Government's assertion that they are in breach of the Defence Agreement. That Agreement has a term of 10 years, and, in the absence of a fundamental breach by either party, it cannot lawfully be terminated before the end of that time except by mutual agreement. I must emphasise that under the Defence Agreement Britain did not enter into any commitment to maintain a minimum number of troops in Malta, as the right hon. Member for Streatham (Mr. Sandys)—who has explained why he cannot be in his place today—rightly pointed out the other day. I am glad that he did so, for he speaks with the authority of having himself negotiated the Agreement.

We are entirely and completely satisfied that the proposed run-down will not place Malta at risk, or change in any way our ability and determination to honour our obligations under the Agreement for the defence of Malta. We are satisfied in this regard after a full and complete professional appraisal of any possible military threat to Malta. My right hon. Friend, when he was in Malta, offered to send out a high-ranking Service officer to explain further the military considerations which we have taken into account so that the Malta Government could fully understand our capabilities to meet our obligations. This offer has not so far been taken up.

Her Majesty's Government are certain and confident that we have discharged all our obligations under the Defence Agreement and cannot be held to be in breach of it both in regard to consultations and the defence of Malta.

Finally, I turn to the position at this moment. It is totally understandable— I am sure we all understand this—that feeling in Malta should be running high and that public reaction on all sides should be as strong as it is. We would expect nothing else, knowing, as we do, the courage and pride of the people of Malta. But they must recognise—and I hope that they will—the direction in which they are moving. As we made clear in the Defence White Paper, we shall not seek to maintain a base or defence facilities of any kind in any independent country against its wishes. Nor, indeed, could we do so.

If impossible demands are made on us and conditions created in which our Forces just cannot operate effectively, the consequences of our total withdrawal for Malta, in terms of deterring investment and undermining international confidence and—even more important—much more severe unemployment, would appear to be extremely serious. This is, however, and must be, a matter for the Malta Government in the last resort to decide. Of course, it is their right to decide. We for our part would regard the sheer inevitability of the consequences of total withdrawal in circumstances in which the Malta Government made it impossible for us to stay as tragic and unnecessary.

It is our view that the Maltese economy is rather more resilient than the Maltese people at the moment believe it to be. For example, the General Workers' Union of Malta produced a paper following the proposals towards the end of last year, and one sees in that paper that the number of jobs in Malta has more than doubled in the last six years. It is a pretty resilient economy with a fair rate of growth that achieves that result. The problem, of course, is that the population of Malta grows as rapidly, or almost as rapidly, as the number of jobs.

But, in the not-too-distant future, with our aid, with an increased rate of private investment and with, we hope, the assistance of the Mission we have proposed to offer guidance—I hope very much that the Malta Government will accept that proposal—Malta's prospects are much better than has been suggested. We want to help Malta to achieve the economic development and prosperity of which she is capable. The last thing we want is that unemployment should be on the disastrous scale which would follow our complete withdrawal. I cannot believe that the Malta Government can wish or intend by hasty action now to put all this at risk.

Sir W. Teeling

Earlier, the hon. Lady referred to something that was to be done to develop and help the dockyard. If we are to discuss that during the debate, can she give us a few more details about what she meant by that?

Mrs. Hart

What I said was that one of the possibilities for Malta was the development of the dockyard, and I think that the hon. Gentleman will be aware of the legal difficulties that have beset the dockyard and of some of the other problems involved. But this is within the competence of the Malta Government rather than our own. However, there are possibilities there and clearly it is right to mention them because they cast a slightly more optimistic light on the picture that is being painted at the moment.

Sir Frederic Bennett (Torquay)

The hon. Lady has referred to possible further economic advice and assistance. She has mentioned the proposed business Mission. That is certainly worth considering. Will this further assistance be limited merely to giving advice? If the Mission gives certain advice, will it be possible to hope for further Government assistance, if that should be necessary to accomplish the Mission's aims and advice?

Mrs. Hart

I am afraid that I cannot possibly anticipate what would happen. Clearly, the Mission would report to the British Government and to the Malta Government. It would do this in good time, before the actual beginning of the rundown, of course. There would be time to consider what it said. It would not be wise for me to attempt to anticipate what the Mission's report would be. We have proposed the Mission to Dr. Borg Olivier but we do not yet know whether he will accept it.

Mr. Thorpe

Is it not the case that reports have come through that the Malta Government have decided to reject the Mission?

Mrs. Hart

My latest information—at about 4.30 p.m. today—was that a message had been delivered from the Malta Government but certainly I have received no communication of any such reaction. We hope that, even at this late hour, the Malta Government—and I refer again to the difficulties that would result from a total withdrawal following a certain course of action by the Malta Government—will not insist on such a course of action. It would be catastrophic for Malta and bring bitterness and tragedy into the long period of 150 years of friendship and co-operation between our two peoples.

Because it is necessary and because it is right, we in Britain must cut defence expenditure in the next four years, especially wherever it is not essential. We know what this involves for Malta. We have done and we shall do everything within our power to help. We have gone to our limits to reach a compromise. The trouble, I think, lies not so much with us as with the world in which, all too often, economies depend upon defence arrangements and armaments, a world which we all seek to change but which changes only very slowly.

But I hope that the Maltese people will also recognise this very great dilemma that faces any Government who make a decision of this kind, which they believe to be the correct decision and the only possible decision that could be taken. I hope that we shall not have the real tragedy of history that would result if the Maltese people, in their strong feelings about this, were to deny us totally the friendship and capacity to help them that we want to maintain. That would be a real tragedy, and on that at least I think that the whole House will agree.

4.18 p.m.

Mr. Reginald Maudling (Barnet)

This is a very serious position. We have a very serious position. We have a situation in which the Government of Malta are accusing the British Government of breach of faith, threatening to expel our forces from Malta and, in fact, taking steps in that direction while the British Government say, "If you do that, in effect that will be the end of aid from us".

Mrs. Hart

I did not say that.

Mr. Maudling

It was said earlier.

Mrs. Hart

I must interrupt the right hon. Gentleman. He has completely got the wrong point. If the Malta Government continue the administrative actions that they have embarked upon this week, and if they continue the remaining stages of that course of action in Parliament concerning the Visiting Forces Act, the position of our forces in Malta would be untenable and we should have to withdraw. But not for one moment would I suggest that we would withdraw aid.

Mr. Maudling

I agree that the hon. Lady did not say that, but it has been said by the Government on many occasions. In face of this situation, her speech was totally and pathetically inadequate. She demonstrated that the Government have no understanding whatever of the problems facing the people of Malta, the feelings of the people of Malta, and the real dangers for our national conscience that arise from the situation.

The hon. Lady talked about the need for economy in our overseas expenditure, quite rightly. But she said that the need for this was in order to expand the social services here, and that will ring a little odd in Maltese ears, if there is an unemployment rate of 15 or 16 per cent. in Malta. The hon. Lady talked of expanding overseas aid and that is important, I agree. But it is not much help to talk of expansion when cutting back on what Malta really needs for its economy. This shows a total misunderstanding of the situation. Our purpose is to try to persuade the Government that they are set on a wrong course. We believe that the feeling is shared on both sides of the House, and goes beyond one party, that the Government's present course is wrong.

This is why we decided not to divide the House on party lines this evening. We hope that the Government will listen to the voice of the House of Commons as we think it will be expressed today. However, particularly after the hon. Lady's speech, if the Government remain adamant to argument and deaf to entreaty, we shall have to seek another occasion to put down a Motion of censure on them, if they will not listen to what I believe will be the earnest plea of the House of Commons.

It is surely a fantastic situation between us and the people of Malta, with the sort of words being bandied about, the sort of actions being taken in Malta and the Press statements generally. The war was 20 years ago and more. It is a long time in the life of an individual, but a short time in the life of a nation. We should all regard it as a tragedy that this kind of situation could arise between Malta and Britain, and we ought to be trying, at the highest level and with the greatest effort, to find a solution. It is now the responsibility of the Prime Minister, in consultation with the Prime Minister of Malta, to re-open this matter and see whether some solution cannot be found to meet the legitimate needs of Malta as well as those of the British taxpayer.

I do not and cannot believe that the present situation is satisfactory. The Government's policy is wrong on a number of points—first, because there is substance in the charge, we believe, of a breach of faith on consultation and the maintenance of the level of forces; second, because the level of unemployment in prospect in Malta, to which the hon. Lady did not refer, is wholly unacceptable; third, because we believe that there is a definite loss on the defence side; fourth, because we do not accept that the economies put forward as the sole justification for this measure are as real or as large as is claimed and that, even if they were, they would not justify a breach of faith with the people of Malta. I will elaborate on those four points.

First, the breach of faith. There is a clear obligation to consult before making any substantial change in the level of forces maintained by Britain in Malta. I was not impressed by the hon. Lady's defence in this matter. She referred to the visit of the Parliamentary Secretary and a subsequent visit by the Secretary of State. This is a very old tactic—to go to people and put forward some preposterous suggestions and then, when one makes them slightly less preposterous, to say, "How nice we have been to them." What matters is not what one suggested in the first place but what one is suggesting at the moment.

The point is that when the Secretary of State—I am sorry he cannot be here today; we know the reason and wish him well in his recovery of health—went to Malta and said on arrival that there was no scope for negotiation on any major matter in this situation, he did immense damage to Britain's cause and put backs up throughout Malta. It was a great mistake. I cannot see how the process of the two Ministerial visits and the way in which they have been handled can be described as proper consultation.

The second point is the maintenance of the level of British Forces. We certainly accept that there was no written guarantee about maintaining a particular level. Nor was there any oral undertaking that a certain level would be maintained after the current rundown, which finishes in the early months of this year. However, it is clear—hon. Friends of mine who were in those negotiations have confirmed this for me—that there was an understanding on both sides that, after the expiry of the current rundown, there would be the maintenance of a substantial British military presence in Malta.

Of course, the calculation of the aid to be given the £50 million over 10 years—must have been based on some assumption about the level of forces to be maintained in Malta. Otherwise, one could not have calculated what Malta needed in aid unless there were some assumption on both sides about the amount of defence spending.

Therefore, there is substance in the argument of the Malta Government that there has been a definite letting down of Malta by the current British Government and that there was a clear understanding on both sides that, as part of the package deal in 1964, involving the aid figure and other arrangements, we would continue to maintain a substantial level of forces. The departure from this has led to the present situation.

The third point is the level of unemployment. We have been given figures, which have not been challenged today, that the effect of this latest proposal—even the revised proposal, which is supposed to be such a concession to Malta—would be unemployment rising in the next few years to 15 per cent. or 20 per cent. of the male population of the island. I understand that these are the official calculations of the Malta Government. If they are wrong, I hope that the Secretary of State, in replying to the debate, will show why they are wrong and not merely assert that they are wrong. This is a very large figure indeed and would be totally unacceptable in this country.

Surely it is a matter of concern to this country. The hon. Lady talks about aid to oversea countries—we recognise her great sincerity—and, rightly, of Britain's responsibility in these matters. But how can one talk of Britain's responsibility to the developing countries, if at the same time Britain is creating unemployment of 15 per cent. or more in a country with which she has been linked for so many years, in such an intimate way?

The hon. Lady referred again to the development of the Maltese economy, of tourism and so on. This is true. It is clear that Malta is developing as a tourist centre and this is important. So rapid is the development of tourism at the moment that there is a shortage of craftsmen in the building industry. But tourism will not provide employment for the large number of male employees who will be discharged in the next few years as a result of this Service rundown.

It should also be remembered that tourism will not expand against a background of civil disorder and discontent in the island. The Government must face this. If they will not make some move in the direction of Malta, if they persist in these proposals, there will be a background of discontent, disaffection and disagreement, against which we cannot possibly hope to expand a healthy and flourishing tourist industry.

As for the other proposals, it is a good thing to develop industry in Malta and we are glad to hear of the proposal to send an industrial mission. I am not sure what this will add. There has been for a long while an Industrial Development Board for Malta, headed first, I think, by Sir George Dowty and now by Sir Saddler Foster, a man whose great experience in this matter we all recognise. I do not see what the new mission will add to the existing machinery.

This producing of a mission at a point of crisis is rather reminiscent of the tactics adopted before by this Government in similar difficult situations. If this mission goes—I hope it will—and reports with ideas and suggestions, it will be many a year before any factories are on the ground as a result, employing male Maltese workers. The time scale is completely out.

The fourth point I wish to elaborate is the question of defence. The hon. Lady referred to this and I hope that the Secretary of State will deal with it seriously. Can he assure the House that, in these circumstances, we are losing nothing of importance to the defence of Britain or N.A.T.O., that having an unfriendly population in Malta, unwilling to see British forces there, makes no difference to British defence strategy in the Mediterranean or the strategy of N.A.T.O.? If he can, we shall be glad. If he cannot, perhaps he will explain why these circumstances will not arise. I hope that the right hon. Gentleman will say something about the attitude of N.A.T.O. to this situation and what advice, if any, has been received from our N.A.T.O. friends.

Apart from the question of any immediate strategic threat, the Malta base has two important uses. The first is communications to other areas in the Mediterranean where we have defence responsibilities or defence contingencies to meet. The second is its importance for training, which I believe can be carried out extremely well from Malta and for which other provision probably more costly, will have to be made elsewhere if our forces are withdrawn from the island. On those points the Government's policy seems unjustifiable.

The reason given by the Government to justify it is the saving that they are making in defence expenditure. I wish to examine this briefly to see what substance there is in the suggestion. I hope that the Government will not put forward the argument that the Opposition is always in favour of economy in general but is never in favour of economy in particular.

The Secretary of State for Defence (Mr. Denis Healey)

That is true.

Mr. Maudling

I thought that the right hon. Gentleman would fall into that trap. However good one's intentions, that is no excuse for making foolish decisions.

Mr. Healey

I hope that the right hon. Gentleman will agree that every measure taken by the present Government to lop hundreds of millions of pounds off the plans of the previous Conservative Government has been opposed by Her Majesty's Opposition in this House.

Mr. Maudling

Only when they have been foolish, like this one.

What is the saving to be achieved? There are two aspects of the saving which must be considered; first, the saving to the British defence budget and, secondly, the saving to the sterling area balance of payments. I would like to know more about both of these. We are told—I believe that this was made clear in the Secretary of State's recent statement—that the saving annually will be about £6 million. This means that £6 million less will be spent on the defence budget. It may be said that those units which will be taken back to Britain will be disbanded, but that is totally irrelevant. The fact that any of the units will be disbanded is irrelevant. The issue is this: given the level of forces the Government intend to maintain, what would be the additional cost of maintaining a proportion of those forces in Malta rather than in the United Kingdom?

I would like a clear statement to show why, to keep them in Malta, is more expensive than keeping them in Britain. I can see that in terms of transport costs the expense is much higher. On the other hand, costs and prices generally in Malta are substantially lower than they are in this country and there are in Malta facilities available—barracks, houses and so on—which I believe are not fully adequately available in Britain.

Then the question of training. I want the Secretary of State to make it clear just how, in his calculations he has offset, against the cost of maintaining people across the air link in Malta, the saving in terms of lower prices there, the availability of excellent accommodation, but also the availability of training facilities. I shall be surprised if, on any careful calculation, economies can be shown on that basis to be anything like what his hon. Friend put forward.

I come to the subject of the sterling area balance of payments, about which I asked the Secretary of State, when he made his statement at Question Time the other day, a question to which I did not receive an answer. There can be no saving to the sterling area balance of payments unless either the sterling area as a whole sells more abroad or imports less from outside the sterling area. I do not believe that these measures will effect a saving of any substantial size on either point. I do not believe that they will increase the exports of the sterling area or decrease its imports. I want to know how the Secretary of State can calculate that there will be a saving to the total import bill of the sterling area by the movement of these units from Malta to the United Kingdom.

My hon. and right hon. Friends, therefore, say that the argument put forward by the Government is only the argument of economy; and we are far from convinced that the economies that they have suggested are justified, either in terms of the total defence budget or in terms of the burden on the balance of payments of the sterling area as a whole and, therefore, on the position of sterling.

We say frankly that even if these figures could be justified, can they really weigh in the balance against the loss of British position, against charges of lack of faith and against 15 per cent. male unemployment in Malta? Even if these figures could be, justified—and I do not believe that they could—can they really weigh in the balance against everything that is at stake at the present time for Britain's relations with Malta?

I implore the Government to think again. It is not too late for them to do so. As I said at the outset, we do not intend to divide the House today because we wish to allow the Government time in which to think again; and we hope that they will do so.

We agree that it is right to try to develop industry in Malta. The mission can go ahead and can help the Industrial Development Board and even tell the Maltese themselves that their own bureaucracy often stands in the way of setting up new industries. The fault never lies on one side alone, and it is important that bureaucracy should be removed and interference cut out so that industrial development can go ahead, perhaps with the sort of I.D.C. procedure that we have in this country.

It is right that all these things should be done in time, but time is of the essence. The run-down as planned will impose on Malta sacrifices greater than we can justifiably ask the people of Malta to bear. Against that background, I once again implore the Government to think again, to reopen discussions, to settle this tragic situation and to stop it developing into a real catastrophe.

5.36 p.m.

Mr. Tom Driberg (Barking)

I ventured the other day to hope that this issue would not become a conventional inter-party quarrel, because there are friends of Malta and hon. Members who are devoted to the interests of the people of Malta on both sides of the House. I was, therefore, glad to hear the right hon. Member for Barnet (Mr. Maudling) give the assurance that, on this occasion at any rate, the Opposition does not intend to divide the House.

Although I agreed with a good deal of what the right hon. Gentleman said, I regretted that he opened his speech on a militant note and with almost a personal attack on my hon. Friend the Minister of State by saying that her speech was "totally and pathetically inadequate." [HON. MEMBERS: "It was."] I am expressing my personal opinion. My hon. Friend was, of course, limited by her Treasury-dictated brief—[HON. MEMBERS: "Oh."]—but I was at least grateful to her—and I mean this sincerely and not ironically—for the sympathetic and understanding tone and words that she employed. My hon. Friend understands the difficulties that this situation means for the people of Malta and I believe that she and Her Majesty's Government are in an appallingly difficult dilemma in trying to do two things at once.

I agree with the right hon. Member for Barnet that this situation has not been handled perfectly either by Her Majesty's Government or by the Malta Government. However, I sincerely hope that something will come out of the offer by Her Majesty's Government to set up a high-powered industrial Mission, as announced by my hon. Friend. She said that she did not yet know what the answer from the Malta Government would be to that offer. I can tell her because I happen to know. It is not exactly the same answer as was suggested by the Leader of the Liberal Party. The answer is neither an unqualified rejection nor an unqualified acceptance. It is that the presence of this mission will be acceptable to Malta —but only if, while it is there investigating the situation, the situation will be frozen, as it were, and the sackings will not start.

The sackings or discharges are not due to start until April. If the mission can be assembled and can proceed there quickly and can report quickly, so that some effective consequences of its report are visible, then I believe that it will be acceptable to the Government of Malta. As the right hon. Member for Barnet said, it takes time to build factories and get other industrial projects started. However, I hope very much that what I believe to be a not unreasonable condition on the part of the Malta Government, in the present overheated atmosphere, will be acceptable to Her Majesty's Government; and perhaps my right hon. Friend will confirm this when he replies to the debate.

Sir Arthur Vere Harvey (Macclesfield)

I appreciate what the hon. Member is telling the House, but it is not unusual for a private Member to transmit to the House what the Minister responsible ought to know? [Interruption.] Will the right hon. Member for Leeds, West (Mr. C. Pannell) keep quiet for a moment? Surely if a message came from Malta the hon. Lady should have read it?

Mr. Driberg

It may be unusual, but there is a perfectly simple explanation. My hon. Friend was sitting on the Front Bench waiting to speak throughout the long discussion on procedure. I was called out by a green card, to the Central Lobby, where I was given this information by a person authorised to give it—that is to say, the High Commissioner for Malta. I hope that satisfies the hon. Member for Macclesfield (Sir A. V. Harvey). I am sorry that he has made me waste another minute or so because I do not want to give way too much to interruptions—not that I am ever reluctant to do so, but they tend to prolong speeches, as we all know.

I was one of five hon. Members who spent the last weekend in Malta in intensive discussions with many representative people. Although there are some differences of emphasis between some hon. Members who were on that delegation, I think I can say that we found complete unanimity on this issue among those we met in Malta. The consternation aroused by my right hon. Friend's statement on Tuesday last week was felt universally—not only by the Maltese, but also by all the senior British officials and Service chiefs with whom we talked. I should perhaps say in parenthesis that I do not think they were upset about it for any purely selfish reasons—because they liked being in that climate, or anything like that—but because they know and love the people of Malta and they know from personal observation how devastating the consequences of this decision can be.

I make only one distinction here. Whereas at the official level we met intense bitterness, not directed against us but against the Government, the ordinary people we met—the man in the street or in the café and the housewives with whom we had occasion to talk—felt extremely hurt, shocked and puzzled. We had ample evidence of their abiding affection for Britain, which is not mere cupboard love. There is, after all, a bond between those who have been through the fire together. I hope that we shall find it possible to retain that affection.

Let me deal, briefly—for we must all be brief—with the obvious and rather superficial charge, which I am glad my hon. Friend did not make, that some of us are always pressing for cuts in defence costs and yet when the Government propose a cut of £6 million a year we grumble about it. We are not being inconsistent in saying this. Some cuts are foreshadowed east of Suez. We welcome them and want many more, but the cost of defence in Malta is trivial in relation to the whole defence budget or in relation to the cost of the Rhine Army. Incidentally, cutting £6 million a year off the cost of the Rhine Army would not wreck the economy of Western Germany. We support all cuts in defence spending, including defence spending in Malta, and the Maltese themselves know that this must happen; but we say that the cuts should be applied and phased, or if necessary re-phased, so that they do the least damage to the Maltese economy and the welfare of the people of Malta.

I think my hon. Friend showed some tendency, as some people do, to suggest that wherever we cut costs overseas it is bound to cause some hardship. This may be so, but Malta is really a unique case. I suppose that Singapore is perhaps the nearest parallel in a way, but there is no other former colonial territory whose economy has been so intensely geared for so long to our defence needs as that of Malta. Now that we no longer need Malta ourselves for defence purposes, at least we should take our departure decently and in order.

There is an analogy here in one respect —I emphasise in one respect only—with the former Belgian Congo. Many of us have been critical of the Belgians because, having ruled the Congo for many years—often most oppressively—they got out almost overnight leaving their colonial subjects totally unequipped educationally for self-government. The Maltese are not ill-equipped educationally—they are an educated nation—but they are ill-equipped economically, in our absence, for viable independence.

We have liquidated the British Empire—as we on this side of the House believe, rightly but it is as irresponsible to abandon a territory suddenly and so cause great hardship as it would be archaic to try to stay there for too long. This hardship, as we have heard already, will be very real. The Government promise technical aid and advice but it is impossible in the next two or three years to build up the industries and create the jobs to absorb unemployment which, as the right hon. Member for Barnet (Mr. Maudling) said, may reach a level of 15 per cent. to 18 per cent. That is equivalent to at least 3 million in this country, or possibly more, a level that would be unacceptable to everybody.

My colleagues and I were greatly impressed by our talk with the General Secretary of the General Workers' Union and other representatives of that union and by the careful and detailed statistics that they had prepared. These are moderate and level-headed men, but they cannot view calmly a situation in which about a quarter of their membership will be out of work, and they represent about 72 per cent, of the organised workers in the island. Incidentally, as hon. Members will know, the unemployment benefit is extremely low. It is 9s. a day for a married man however many children he has—and Maltese families tend to run well towards a dozen—and 6s. a day for an unmarried man.

It may be said—I think the right hon. Member for Barnet was hinting at this towards the end of his speech—that the Government of Malta should itself have been more vigorous in planning economic development and more diverse industry. As a Socialist, I cannot help wishing that the dynamic present Leader of the Opposition in Malta, Mr. Mintoff, had been in charge during these years, but I do not want to indulge in recriminations about Malta's internal affairs at this serious moment and the difficulties—not least, in finding external markets for exports—are indeed formidable for any Government in Malta.

Tourism, as has been said, is the one industry that has been advancing fairly rapidly, but again I agree with the right hon. Gentleman that tourism cannot possibly absorb all the redundant workers even if all the older ones could adapt themselves to hotel work, and—another important point—facilities for retraining are nil.

Mr. Paul B. Rose (Manchester, Blackley)

Would my hon. Friend agree that the possibilities of tourism have not been tapped in relation to other European countries and that jointly this Government might possibly give aid to Malta in expanding tourism? Would he also agree that the right hon. Member for Barnet (Mr. Maudling) missed the point about peripheral industries which might be attached to tourism?

Mr. Driberg

Anything that can be done to attract tourism from other parts of Europe—and of course Italy is very near—would be extremely welcome. One difficulty is that this very crisis is having an adverse effect already on tourism. Potential visitors are telephoning and asking, "Is it safe to come?", because they fear that there may be disturbances.

A re-phasing of this exercise would cost a little more. It would diminish, though I think not too significantly, the saving of £6 million. I do not know whether my right hon. Friend the Secretary of State for Defence will be able to tell us how much more it would cost if what is called the "hump" were reversed, if, instead of the hump falling in the first and second years—that is when the heaviest incidence of this hardship will be—it were levelled out a little and were to fall in the second and third years or in the third and fourth years of the four-year period. I do not know if my right hon. Friend can tell us how much it would cost. Even with our present economic difficulties, the difference between our resources and those of Malta is so enormous that we can surely afford one more gesture of friendship.

Nor is there any balance of payments element in this problem. It may be argued that sterling is convertible in Malta, but I understand that steps have been taken by the Malta Government to restrict convertibility as it is restricted here.

There is a disposition in some quarters to say that, when the four years are up, our moral obligation to Malta will have been fully discharged. If there are two friends with a mutual moral obligation, or one friend who has a moral obligation to another, it is not particularly gracious for either of them to say unilaterally, "There! I have discharged my moral obligation to you". One cannot quantify moral obligations or assume that life and death service freely rendered has ever been adequately requited. As my right hon. Friend the Prime Minister said recently in an entirely different context, quoting Wordsworth: … high Heaven rejects the Iore Of nicely-calculated less or more. I appreciate that the Chancellor cannot think in those terms, but possibly the Commonwealth Secretary ought to be able to.

This brings me to my last point, the point about consultation. This is of much less concrete importance than the basic economic issue, but it is psychologically of considerable importance. Her Majesty's Government have a legal case. There were the vague words in the Defence Review, followed by a telegram from the Prime Minister which gave no indication of impending cuts of this severity. There was the visit of my noble friend Lord Beswick last August. Apparently he did not really go there to consult in the ordinary sense of the word. He went to present a set of decisions so startlingly harsh that they were quite unacceptable.

As my hon. Friend the Minister of State reminded us, note was taken of this sharp reaction and the Government agreed to extend the rundown from two to four years—a welcome concession so far as it goes, but still ruinous to the Maltese economy. We must remember that Article VI of the Defence Agreement promises consultation when major changes in the British forces … which might have significant effects on the defence or economy of Malta are contemplated"— contemplated, not when they have been decided already.

I must agree also, I am afraid, with the right hon. Member for Barnet and the hon. Member for Surbiton (Mr. Fisher) in thinking that it was a little unfortunate that my right hon. Friend the Secretary of State for Commonwealth Affairs should have allowed himself to be caught by the Press at the airport on arrival—this is so easy to do, as we all know—and to say that there could be no bargaining on major points. I am sorry to have to say this in my right hon. Friend's absence, but this caused deep offence to the Malta Government. Genuine consultation, after all, usually involves some bargaining. We have always distinguished between consulting and merely informing.

One of the tasks of statesmanship and diplomacy is precisely to be able to put oneself in the other man's place and to identify oneself imaginatively with him in his hopes and his fears. It is a general practice in negotiating to ask or to offer, at first, something much more or less than one realistically expects to end up with. To the Maltese, it must seem that Lord Beswick was offering them the death by 1,000 cuts and that the Commonwealth Secretary then came along and said, "We are being fantastically generous. We offer you death by 500 cuts". I hope that is not unfair.

As I say, the British Government have got a case. No doubt they argue that the change of plan between the two Ministerial visits and the Prime Ministerial discussions, which the right hon. Gentleman did not mention but of which my hon. Friend the Minister of State reminded us—last September, I think they were—did cumulatively represent a kind of consultation, or at least a taking cognisance of the other party's views. But it is surely time that both Governments stopped arguing legalistically and got down to the business of discovering how to cushion this blow to the unfortunate people of these small islands so that, when we withdraw, they will cherish our memory and will say, "Nothing in their Empire became them like the leaving it."

5.56 p.m.

Mr. John Page (Harrow, West)

I congratulate the hon. Member for Barking (Mr. Driberg) on his speech, with very every sentence of which, except one, I am in the fullest agreement. He is on the Left of his party. I believe that I am well on the Right of mine. However, the remarkable unanimity in our attitude at the end of our weekend's visit to Malta should, I believe, mean that the whole spectrum of thought in the House is covered.

I agree with my right hon. Friend the Member for Barnet (Mr. Maudling) that the speech of the Minister of State this afternoon was extremely disappointing. It will be considered anxiously by the people of Malta. They are getting nothing out of it at the end. The hon. Lady has to be the foster-mother of a baby which was born in the Treasury, smuggled to the Ministry of Defence, and left screaming on her doorstep. We have sympathy with her in her predicament in reading out the awkward brief, which she must have hated doing.

I shall make a short but tedious speech, because I want to get some figures down in HANSARD so that they can be discussed on a future occasion. I want to discuss what the real savings are by the new plans which the Government have announced; also, what will be the effect on the employment position and on industrial life in Malta.

First, the savings. When considering savings in defence expenditure covering an overseas base, the savings would be, first, in direct wages and payments to the nationals of that base—in this case, the Maltese. Next, there must be the savings in the difference between the cost of keeping British Service men and their families in England rather than in Malta, including travelling and the welfare services. Lastly, there are any savings in the maintenance of buildings and equipment in Malta. However, since I believe that we shall retain virtually all the buildings and facilities which we now hold in Malta. I do not think that saving comes into the picture at this stage while we are retaining a base in Malta.

We come first, therefore, to the direct savings in wages paid to the Maltese. My calculations are based on the figures which, I believe, were agreed between the Malta Government and the British High Commissioner and Service chiefs in Malta. The savings in direct wages in each year will be as follows: year 1967–68, £730,000; year 1968–69, £1,100,000; year 1969–70, £300,000; year 1970–71, £330,000.

Those figures underline the point made by the hon. Member for Barking, that the greatest number of sackings in Malta comes in the first two years. Nearly 2 million are sacked in the first two years, starting in April, compared with 600,000 —[HON. MEMBERS: "What? "] I am sorry. I should have spoken of savings in wages paid to Maltese workers. I have the figures for the number of workers themselves, but I do not think it worth putting them down as well.

The aggregate of these savings in wages will total over the four years £7,120,000, a slightly higher figure than that given by the Secretary of State for Defence, and the maximum annual saving will be £2,500,000. However, from these figures of total savings in the balance sheet we have to deduct the payments which will be made in gratuities and redundancy payments to the dismissed Maltese workers. I believe that this total comes to the staggering figure of £3 million. The reason is that most of the civilians working for the Services are long-term employees. There have been no civilians recruited to help the Services during the past five or six years.

Now, the next saving to the Government. It has been said that it costs £300,000 a year less to keep a battalion in the United Kingdom than it does overseas. Assuming that a battalion has 800 men, and assuming, luckily, that one can relate the returning Service men of different arms to this country, one can establish that the savings in drawing these men back to the United Kingdom will be £1 million over four years.

Next—I want the right hon. Gentleman to think about this seriously because it is one of the keys to the way out of his difficulties—there is the Royal Malta Artillery. I understand that this unit has 720 men costing £100,000 a year to maintain in Malta. It is suggested that it should be disbanded in 1968, thus throwing those 720 men on to the labour market in Malta. I urge that the unit be retained until the end of rundown period, 1970 or later, the Royal Malta Artillery being left in Malta and one of the British battalions being brought back home. This will make a saving, but I have not included it in my calculations.

I come now to another important cost to the Ministry of Defence, the cost of rehousing in this country the 1,600 families who will be brought back from Malta during the next four years. I understand from a Written Answer by the Under-Secretary of State to a Question of mine that at present officers of the Ministry of Defence are driving about the country with cheque books buying up to 3,300 houses in which to accommodate returning Service men, and they are also making ready caravans and mobile houses in case they cannot buy and furnish this alternative accommodation in time. At £4,000 a house, the rehousing of these Service men will cost £6,400,000 during the next four years.

Thus, in the balance sheet there will be the Minister's savings of £7,120,000 in wages and £1 million in cost savings because Service men are over here. That is a total of £8,120,000. From this must be deducted—in fact, it overtops mere deduction—the redundancy payments of £3 million and the rehousing cost of £6,400,000, giving a total of £9,400,000, proving that this dramatic defence saving plan will, in fact, cost the Government £1 million more in the next four years than if things remain as they are.

Mr. Healey

The hon. Gentleman is mixing up an annual saving in the figures which he presents—which I do not endorse—with a once-for-all capital cost. If he wanted to give a fair account, even accepting his figures, which I do not, he would have to divide his £9 million by four and deduct that from his £8½ million.

Mr. Page

If the right hon. Gentleman is referring to the capital cost of purchasing houses over here, I contend that that is arguable, because it is only the replacement by permanent houses here of houses which already exist in Malta.

I come next to the question of unemployment, the figures for which were given by the hon. Member for Barking —15 to 20 per cent. unemployment, with unemployment pay at 54s. a week for 26 weeks only. This is a desperate state for this House to plunge a friendly country into. In this connection, I shall read early-day Motion No. 340, signed by 36 hon. Members opposite: That this House expresses its grave concern at the January total of unemployment of over half a million wholly unemployed; feels that this is an unacceptable level; and calls upon Her Majesty's Government to adopt measures that will increase production and ensure full employment throughout the United Kingdom. To that Motion my hon. Friend the Member for Nantwich (Mr. Grant-Ferris) and I have proposed that the following should be added: and further calls upon Her Majesty's Government to modify the new proposals for the defence run-down in Malta which will raise the level of unemployment in Malta to 18 per cent. or the equivalent of 4,500,000 unemployed in the United Kingdom. If these facts were known by the people of this country, they would not for a moment tolerate the present Government's policy towards Malta.

Today, only one day after a letter from the wife of the High Commissioner for Malta appeared in the Daily Telegraph, over 600 letters of sympathy for Malta have arrived. They are still pouring in. They come from all over the country, including the Channel Islands and the Isle of Wight, and they come almost entirely from people who have never been to Malta but who feel that they have, as English people, an obligation to Malta.

Finally, there is the question of the effect of the Government's policy on industry and tourism in Malta, both of which, as the hon. Lady said, are doing well at present. I wish to read a cable from Malta received today by the Director-General of the Institute of Directors: At meeting local members Institute of Directors we resolved seek your intervention by appealing to Fellows of the Institute…to back Malta Government's request that U.K. Government abide by original agreement thus preventing untold hardships to thousands Maltese families and severe consequences on local economy and set back industry and tourist development creating grave political problems and endangering Anglo-Maltese relations. I should also like to read a letter from the chairman of a major development project, the free trade zone, which is the most exciting big development Malta has. The chairman has given me permission to use it. He writes: With regard to our Free Trade Zone (or Port) project we are naturally disturbed by the possibility that the now proposed rundown will produce unemployment and internal political instability with immediate adverse repercussions on Malta's present image abroad. This, in turn, would frighten off would-be investors for any major project for Malta, including ours. That telegram and that letter from authoritative people speak for themselves.

Since last weekend I feel passionately a responsibility to the people of Malta and my constituents to beg the Government to change their mind and course so as not to force this loyal and friendly little people into a situation that could cause a catastrophic industrial depression, and possibly, in the long run, the break-down of the whole fabric of Maltese society.

6.12 p.m.

Mr. James Dickens (Lewisham, West)

I want to begin by placing on record on behalf of myself and other members of the Commonwealth Parliamentary Delegation to Malta our thanks for the courtesy, generosity and hospitality we received during our recent short but intensive visit to the island. I am sorry that I must this evening express a view contrary in many important respects to that voiced earlier by my hon. Friend the Member for Barking (Mr. Driberg). There is more to it than just a question of difference of emphasis and approach, because my examination of the problem has led me to radically different conclusions, so that the unanimity to which the hon. Member for Harrow, West (Mr. John Page) referred is an exaggeration and must not be taken to include me.

I went to Malta a firm supporter of the Government's decision to make defence cuts both on the island and generally as part of the reductions contained in Defence Review published last year. I regard Malta as a test case, a dress rehearsal for the withdrawal from Singapore which I hope will be forthcoming. The problems being thrown up in Malta will come up time and time again as we withdraw from Singapore, from Aden, and generally east of Suez, and I hope also from Western Germany.

I make no bones about the fact that think that we must keep a cool head in a situation which may be unduly clouded by sentiment. I have made my view in this respect very clear to the House. I do not think that any hon. Member will charge me with failing to criticise the Government where I have thought that they were wrong in policy decisions at home and abroad. Thus, it is pertinent to refer briefly to my speech in the economic affairs debate on 1st December, when I set out my view of the overseas defence problem. I said: I want the Armed Forces, by 1970, to number no more than 300,000 men. I want us to have left Malaysia, Singapore, the Persian Gulf and Western Germany and to see our overseas commitments confined to modest garrisons in Hong Kong, Gibraltar and West Berlin. We on this side expect to see defence spending at not more than £1,750 million in 1970, at 1964 prices."—[OFFICIAL REPORT, 1st December, 1966; Vol. 737, cc. 709–710.] That was my view then; it was the view which I publicly expressed in Malta over the weekend, and it is assuredly my view tonight. Besides supporting the Government's decision to make defence cuts in Malta, I want to see us reach a position in Malta by 1970 where we have no military expenditure at all there. I shall want a clear and convincing statement from my right hon. Friend tonight to justify a continued annual expenditure of £6 million after 1970 to maintain a Royal Air Force staging post on the island.

However, I have always taken the view, which I expressed on 1st December, that our withdrawal from overseas defence commitments must be a phased withdrawal. I have never taken the attitude that we can clear out, as it were tomorrow, without any regard to the local consequences or our overall foreign and defence policies; hence the need to renegotiate our treaty obligations, our bilateral agreements and Commonwealth commitments. There is also the need to start the process of renegotiation at the earliest opportunity, for example in the case of Singapore, and to tie the defence run-down as far as possible with an overseas aid programme within the limits of the aid this country can afford, as in the future case of Aden and I trust in Singapore also. It is worth mentioning in passing that British defence spending in Singapore is equal to 25 per cent. of that island's gross national product.

There are four basic questions to be resolved in dealing with this problem: first, that of consultation; secondly, the phasing of the defence rundown; thirdly, the question of trying to relate the economic aid programme to the defence run-down; and finally the vitally important question of the future economic development of Malta.

Our delegation met Dr. Borg Olivier and his Cabinet on 28th January, when he raised the point of lack of consultation. My colleagues on the delegation will agree that I at once closely questioned him on that assertion. He confirmed that the Maltese Government had had advance notice of the intimation given in paragraph 21 of last year's Defence Review (Cmnd. 2901) of the Government's decision to make defence cuts in Malta. That was not last August but last February, and in advance of publication. He had then made representations to my right hon. Friend the Prime Minister who sent him a confidential reply which, in my judgment, set out a comprehensive and reasoned statement of the Government's position and made abundantly plain that the Government here would fully and adequately consult with the Maltese Government on the phasing of the rundown.

Mr. Driberg

I am not sure whether that was a confidential discussion or not. My hon. Friend says that there was advance notice, but Dr. Borg Olivier told us that he was astonished to be told of this on the very eve of publication of the Defence Review and that when he asked the High Commissioner if he could delete the words about Malta, or have them modified, he was told that it was already in print and on sale.

Mr. Dickens

I think that my hon. Friend will recollect that the Prime Minister of Malta confirmed to us then that he saw the statement in draft. I agree that he could not amend the draft. The point that I am trying to make is that he was given adequate notice then of the Government's policy decision to phase the rundown over the next four years. This was much earlier than August of last year when my noble Friend Lord Beswick made his visits.

Following this remark, Dr. Olivier made the assertion that when he came to London in September, 1966, after the visit of Lord Beswick to Malta the preceding month to which the Minister of State referred, he raised this matter with my right hon. Friend the Prime Minister and other officials informally. He said that he felt that the rundown would take place over a period of from 15 to 20 years. When I asked for documentary evidence of this, none was forthcoming. Taking the sum of this, together with the carefully documented evidence presented by the Minister of State this afternoon, I am convinced that full and adequate consultations took place and that this was the local view in Malta until comparatively recently.

This agitation about the lack of consultation has been worked up over the past few weeks on the island. For example, The Times of Malta, owned by the redoubtable Miss Mabel Strickland, expressed this view on 14th January: The Prime Minister— that is Dr. Borg Olivier referred to the serious consequences on the economy and on the employment situation in Malta if the British Government had to implement the reductions proposed at the time of Lord Beswick's visit to Malta last August. Those proposals have now been reviewed and it is believed that they have been modified. The present consultations— and those consultations in January went on over four days and had been preceded by several months of exchanges between the respective Governments— 'are mainly on the results of the review of the British Government's original proposals. Dealing then with the first of the four points that I have raised, I must place on record my conviction, as a member of the Commonwealth Parliamentary Delegation to Malta, that, in my judgment, adequate consultations took place. It is always difficult to make up one's mind about where consultation begins and ends —the difference between consultation and mutual agreement. My impression over the weekend was very distinctly that the Maltese Government were not seeking consultation so much as mutual agreement, on the understanding that we maintained something like the present level of defence spending in Malta indefinitely.

The second question is: have the defence cuts been phased fairly over the periods? The first proposals of the Government, taken out by Lord Beswick in August last, proposed a reduction from the then anticipated level of spending of £50 million over a four-year period to a level of £29 million, thus involving the Government in a cumulative overseas defence cut in Malta over four years of £21 million. It is important to be clear that the saving is not just the ultimate saving in 1970 of £6 million. There are savings in 1967–68–69, which must be added to the total in 1970.

The second proposal, as I understand it, was that the proposed spending over the four years should be increased from £29 million to £33 million, thus reducing the savings from £21 million to £17 million. This indicates a substantial saving in expenditure in Malta, not just £6 million in 1970 but £17 million. I think that I am right in saying that this is at present a saving in foreign exchange. I was interested to hear the point made by my hon. Friend the Member for Barking on the present policy of the Maltese Government in this respect, and I would like this matter cleared up. My impression is that because of the convertibility of sterling this is a saving in foreign exchange, despite the fact that the saving is being effected in a territory within tie sterling area.

What is the effect of the re-phasing? I think the Government have been sensible in modifying the original proposals and in spreading them over a four-year period. It is worth noting that the defence reductions proposed by the Government for Malta in 1967–70 are less than those made between 1964–67. These proposals over four years are reasonable and practicable. When I was in Malta I expressed the view that our discussions must take place within the limits established by the Government's modified proposals and that any adjustments must be made on the military phasing within the Government's proposals.

I am now convinced that there is no military justification for any further re-phasing and that there is no breach of the 1964 Defence Agreement. The Minister of State referred to the letter in The Times yesterday, from the right hon. Member for Streatham (Mr. Sandys) who said: Britain I did not enter into any commitment to maintain a minimum number of troops in Malta. He should know for he signed the 1964 Agreement.

There is some controversy as to the net saving at home. Now, it is obvious that the cost of keeping armed forces in Malta is substantially more than keeping the same forces here. There is, for example, the saving in the cost of sending men and families to and from Malta and in transporting equipment from Malta to England. This highlights another aspect of the problem to which we must give more attention, and that is the need to review the numbers in our Armed Forces in 1970 and subsequently, following withdrawal from east of Suez and from Western Germany. This makes the case not for bringing troops back from Malta or any other base and simply rehousing them here, but for pursing a policy of demobilisation of a substantial number of men when they return.

Under the Defence Review we are currently committed to a defence force of 451,000 men of whom 213,000 are stationed overseas. When the men return, this figure will be too high and, as I said on 1st December, I want to see the Armed Forces by 1970 numbering no more than 300,000 men. I hope that my right hon. Friend the Minister of Defence will be giving close attention to the need for a rapid review of our requirements in 1970.

Mention has been made of the grave unemployment problem in Malta. No hon. Member—certainly no Member on this side of the House—can view with anything other than anxiety and concern a situation which creates a high level of unemployment, or which seems to do so. There is widespread doubt about the estimated unemployment figures in future. It is fair to say that every organisation which we met in Malta gave us a different figure for the level to which they thought unemployment would rise. I am not trying to minimise the matter, but it must not be exaggerated.

I am impressed by the fact that in 1962 a survey conducted on the effects of the rundown between 1962 and 1967 has proved to be seriously wrong. The forecasts of unemployment and the expected reduction in the gross national product were clearly unduly pessimistic. I entirely endorse the Minister of State's view that Malta is far more resilient in terms of its domestic economy than the local people believe. Far from the per capita income falling, as was forecast, it reached £165 in 1965—a record for the island.

I turn to the question of the financial aid agreements. Malta is, I think, treated generously in this respect. I do not use the word "generously" in a patronising sense. A substantial amount of British aid is being given to Malta. In the three years ending 1967, £18,800,000 was made available, of which £17,700,000 has been spent. A balance of £31,200,000 remains for the seven years ending 1974. This does not relate to the oft-quoted figure of £18 per head, because I find, on examination, that this figure refers only to the calendar year 1965. The aid per head is, I understand, nearer £20, taking a three-year average from 1964 to 1967. This is the second highest in the Commonwealth. It is exceeded only by Zambia, where there are special circumstances.

It is worth noting that in the three years from 1964 to 1967 75 per cent. of the aid was made available in direct gift and 25 per cent. by loan. These terms are very much better than those generally available elsewhere.

My third question is: can the civil aid programme be dovetailed to meet the needs of the defence rundown?

Sir W. Teeling

rose—

Mr. Dickens

I am sorry, I cannot give way.

The first requirement is to ensure that the high-powered industrial commission which I understand is leaving for Malta shortly, and whose announcement I warmly welcome, obtains from Dr. Borg Olivier a clear commitment to establish forthwith a Malta Development Corporation in terms of Article 4(2) of the financial assistance agreement of 1964. The House is bound to ask the Malta Government why it has taken them since September, 1964, to get this elementary, basic step under way. There is a need for Dr. Olivier to take this initiative by responding to the overtures of the Government as announced today by saying that he will set up this Corporation without further delay.

I entirely agree with the right hon. Member for Barnet (Mr. Maudling) that the Maltese Government must show much more drive and application in dealing with their own problems. I go further. I think that they must show a real desire to plan the island's economy. In the recent past, it has become a paradise for property speculators and investment by private entrepreneurs on a completely unplanned basis. The answer to Malta's domestic economic problems is planned economic and commercial growth.

The things which one would like to see happen in Malta can be summarised as follows. First, I hope that the Maltese Government will soon examine the possibility of effecting a Customs union with Libya. Secondly, the dockyard requires drastic modernisation spread over the next two years to provide new quays, a new dock and more equipment. There is also a need for a rapid increase in shipbuilding as distinct from dock repairing. Tourism is on the increase, but the increase in recent years, while significant, has been nothing like as great as it could have been. The number of tourists was increased from 11,000 in 1957 to 48,000 in 1965.

Mr. Dom Mintoff assured me on Sunday evening, in the course of a conversation lasting over two hours—my hon Friend the Member for Barking will agree with this—that the Maltese economy could certainly cope with 400,000 tourists in the 1970s. Therefore, the scope is enormous. We invite the Maltese Government to consider establishing a Malta central bank to encourage investment in the development corporation by making available, perhaps, a 10-year tax-free holiday for investments and to stimulate local industry by making the building of hotels conditional on the use of a certain proportion of local ancillaries.

Finally, I wish to refer to one aspect which concerns me very much, and that is the ability of the rich Maltese to help their own islands. I was concerned to note that there is no pay-as-you-earn Income Tax system and that there was alleged to be much tax evasion. On my return to this country I took expert nonofficial advice and I am assured that this is the case. Again, there is no difference between earned and unearned income for taxation purposes. Income Tax in Malta accounts for only 19 per cent. of the national income of the island. This figure can be compared with 35 per cent. in the United Kingdom. I know that the economies are different, but the gap is far too wide for that to be the only explanation.

There is the question of the export of capital from Malta. There can be no doubt that the export of capital by rich Maltese in recent years has been enormous. Indeed, the amount returned from overseas investment to Maltese private citizens reached £2 million in 1965.

Sir W. Teeling

On a point of order. I should like your guidance, Mr. Speaker. We have heard speeches from my right hon. Friend the Member for Barnet (Mr. Maudling) and by the Government representative. Since those speeches, each contribution has been made by people who have just been out on this last delegation which, I gather, was there for only 48 hours. Are we to understand that what the hon. Member for Lewisham, West (Mr. Dickens) is telling us is what he heard there, or is it what he has been briefed on by the Government since he returned to this country?

Mr. Speaker

That is not a point of order, but I remind the hon. Member for Lewisham, West (Mr. Dickens) that many hon. Members wish to speak.

Mr. Dickens

I take your point, Mr. Speaker, and apologise for speaking too long.

I think that the Government's defence cuts in Malta are justified. There has been adequate consultation. The overseas aid programme for Malta is substantial and, given the will locally, the technical assistance given by this country can be used to the advantage of the island. I repeat my firm conviction that the development of Malta as an independent country rests on its own initiative and on economic planning, and I wish Malta every success in thus meeting the challenge of the years ahead.

6.39 p.m.

Sir Arthur Vere Harvey (Macclesfield)

I shall try to be as brief as possible because I know that other hon. Members wish to speak.

I do not know that the hon. Member for Lewisham, West (Mr. Dickens) has made a very helpful contribution to solving the problems of Malta. It is no good muddling the situation up with a lot of statistics and figures. We are dealing with the human problem of how these people are to live.

The hon. Lady the Minister of State, Commonwealth Affairs, was not in her best form. However, I sympathise with her, because she was probably given the brief at fairly short notice in deputising for the Minister. What she said was not very helpful. We have merely been told that an industrial Mission will probably go to Malta. We were not told whether there will be financial backing if it makes proposals acceptable to the Maltese Government.

We all recognise, on both sides, that our Forces overseas must be reduced in size. I have posed myself this question. There are something like 60,000-plus British troops in the Far East. The wat with Indonesia, or the possible war which might have taken place, is over. We were told by the Prime Minister a year ago that there would be massive withdrawals from the Far East. We now believe that the "massive withdrawals" may be 10,000.

Mr. Healey

indicated dissent.

Sir A. V. Harvey

The Secretary of State does not agree. Perhaps he will tell us the figures later.

We hear little these days about the number of troops to be brought back from Germany. Everybody is agreed that the possibility of war in Central Europe today is negligible. We are looking at the problem in the Central Mediterranean area from a human point of view. If troops are to be brought home, whether from Aden or the Far East, as Malta's economy is in a special position why cannot those troops and married families be phased through Malta?

We are told that the Government want to buy some 3,000 additional homes in the private market. This does not reflect much on the Government's housing record in this country. The hon. Member for Lewisham, West talked about what had not been done in Malta during the last two years. He had better look at the record of his own Government and see what they have done during the last two years before criticising the Maltese.

I would say that during the last two years the Maltese Government have made tremendous, impressive strides. The reason they are unable to make greater strides is the lack of able civil servants to deal with planning and the rest. Everybody who has been to Malta cannot help but be impressed by what the Maltese have achieved in a very short time.

But why pick on Malta in this savage manner? We know that the noble Lord the Under-Secretary of State went out in August and more or less told the Maltese Government what would happen. More recently, the Secretary of State went out there. Whatever the hon. Lady may tell us, there has not been real consultation.

Furthermore, Malta is one of the few places that welcome British troops. It seems extraordinary to keep them in places where they are not welcome and to bring them back from a country which really wants them. We all agree that this move is not being done for defence reasons—of course, not. My right hon. Friend's letter to The Times yesterday was dead right. The contract is not being broken, but the spirit of the contract is.

These people were maintained on that small island for over a century working mainly in the British naval dockyard There is no scope for them. It may be that we as a nation were much to blame for giving them so little scope in agriculture and in citrus fruit growing. We have a responsibility. Successive Governments have not dealt with this matter properly. They have simply employed the people in dockyards or on airfields to suit our own convenience.

As the hon. Member for Lewisham, West has said, a great deal of building of hotels has taken place on the island. Five or six large hotels are being built. There is a shortage of masons and craftsmen. These hotels, however, will be completed in two years' time. We cannot go on building hotels indefinitely. This work will have to ease up. The craftsmen will then work on building small villas or bungalows or renovating houses. There will not be work for them just at the time it is needed when the Forces are run down in three or four years' time.

Of the population of 317,000, only 88,000 are gainfully employed and at present 8,000 are unemployed. The balance of payment figures show that £27.7 million is poured into the island through invisible exports. Visible exports amount to only £7.1 million out of an aggregate of £34.8 million. It would be quite impossible for the Maltese Government to collect an equivalent amount of invisible exports.

In four years' time, we shall get the full effect of the Government's proposals, which mean that 7,000 Maltese who are now earning their living with the British Forces will be out of work. I recognise that some of them will be absorbed in the expansion of the tourist industry, but a hotel does not take all that many waiters, cooks and the rest.

In the meantime, 11,500 school leavers will be thrown on to the labour market. I recognise that a number will go to Australia and America and some will come here, but that is not the answer to their problem. It can, therefore, be seen that by 1970 some 17,000 people on the island will be unemployed.

At Question Time the other day, I asked whether we could be given some figures on economics. The problem is so important that the House should have a White Paper showing the exchanges and setting out the actual facts so that everybody can study it. How much of every £1 spent on a British Service man in Malta finds its way back to the United Kingdom?

The problem in Malta is entirely different from that of Germany. British ships and British aircraft have a monopoly. The N.A.A.F.I. sells British products. The British soldier, sailor or airman even uses British postage stamps to write home to his family in Britain. He may drink local beer, which is produced by a British company. The net loss to this country cannot amount to a great deal in the long run.

I wonder whether the Government would dish out this treatment to Zambia if the case was reversed. Only yesterday, nearly £14 million was signed up for Zambia. I wonder. My impression is that the Maltese are charming, delightful people and are not really capable of getting beneath another Government's skin, which they are doing their best to do this week. In this respect, I think that they have acted a litte too hastily. I would have preferred the Maltese Government this week to have seen the result of this debate before starting to refuse supplies to our Forces.

I wish briefly to refer to the Royal Malta Artillery, comprising 950 officers and men, and not the 720 as mentioned by my right hon. Friend. [Interruption.] We cannot both be right. One battalion is in Germany and the other in Malta. There has always been disparity in pay. I do not know why the pay of the Royal Malta Artillery is not up to the level of that of the British troops.

We were told the other day that the opportunity will be given to the Maltese in the Royal Malta Artillery to volunteer for the British Forces. That is a fine outlook when we know that even British Forces are being run down year by year. No Maltese who volunteers for the British Army will ever have the chance to serve on his own territory for the rest of his working life. What a grim offer to make to these men when, in one month during the war, in May, 1943, the Royal Malta Artillery shot down 102 aircraft.

I hope that we will not be told that this is all slop stuff. It is not. We have had our connection with this island for 150 years. There is real feeling about it in Britain, far more feeling than in the House of Commons. I hope that the Minister understands this. He will know about it as the weeks and months go by.

There has been real comradeship throughout the last 150 years between the British and the Maltese Forces. The late King George VI made himself Colonel-in-Chief—these are not laughing matters—at the height of the war, when the Maltese were living on one meal a day from a soup kitchen. They were not getting the food which our Forces got during the war. Their water supplies in the island were cut off. Petrol had to be taken in by submarine. I do not think that any of us in these islands, except those who served there, has any conception of what the people of that island underwent during the war.

This is a situation which Parliament cannot tolerate. I ask the Secretary of State for Defence, for whom I have had great affection over 20 or more years for his fairness in dealing with these matters, to look at this one not from the standpoint of a defence agreement, but from a human point of view, to spread the agreement, not over four years, but over, perhaps, six or seven years, and to phase back troops from the Far East through Malta. Above all, I ask his right hon. Friend the Prime Minister to telephone Dr. Borg Olivier inviting him to come to this country for discussions, in an endeavour to settle this problem in the next few days.

6.50 p.m.

Mr. R. T. Paget (Northampton)

My hon. Friend made a long, interesting and well-informed speech. However, in my view, it was totally irrelevant to the issue which we are discussing, because it is an issue not of economics but of emotions. There are intense emotions involved, and it is not only new and inexperienced Governments who allow an emotional issue to override their interests and their reason. Even experienced Governments do it sometimes, but inexperienced Governments do it more often, and one has a special responsibility when one feels that sort of thing happening. After all, we have seen an Empire dissolve. It may be that we comfort ourselves by saying that it has turned into a Commonwealth. None the less, it has been a humiliating experience.

In what remained of the Empire when we came to power two years ago, there were two places where there was an intense emotional attachment to this country. With one of them, we are in tragic conflict. I am not saying anything about the rights or wrongs of the Rhodesian situation, but I remember, in that summer of 1965, talking to my right hon. Friends and saying to them, "It is no use saying that the 1961 Constitution gives all the reality of independence without external burdens. What they are concerned with is the emotional question. They are being treated as inferiors to their late colleagues in the Federation. Unless you get over that, it is not interests but emotions which will override". That was not appreciated and, as a result, we have reached this tragic pass. I hope most profoundly that, in the case of Malta, we shall find a happier solution.

In Malta, we are dealing with an immediate emergency. It may be that we have 24 hours to resolve it. We have to save her face before she cuts off her own nose. Somehow, we have to find an escape for a Government who, in high emotion, have unwisely grossly over-committed themselves. That is all we are talking about. We are not discussing the rights or wrongs or long-term economics. We are considering how we can find an escape for the Maltese Government from the position in which they have put themselves.

I am confident that a high-powered economic Mission is not the answer. The Maltese know that they have our cooperation, and we have persuaded them to postpone the Third Reading of their Visiting Forces Repeal Bill for one day. It would be quite impossible for Dr. Borg Oliver to go to his Parliament and say, "We can postpone this now. We can leave these forces and not do the things which we have said we intend to do, because the British Government are sending us a high-powered Mission." That is no good. What we have to do is to say that we will have another look at the defence situation, because, with Malta's wartime record, it is in that that there are emotional issues involved. It is that which makes her people feel that we are treating them as inferiors. It is there that their feelings are hurt. It is only by a movement in our defence position that we can give them a chance to have second thoughts.

I beg my right hon. Friend to say that we will stay everything for the time being and reconsider the position. I ask him to say that we will appoint economists and work out what is the saving in having troops here rather than in Malta. After all, from the point of view of a strategic reserve, nothing could be more convenient than Malta's position—even Germany's. Even if it means less aid, I ask my right hon. Friend to think hard about this. If we can move from our position on defence, it may save the situation.

If my right hon. Friend says in answer to a point from an hon. Member opposite that we are leaving once-and-for-all capital costs and annual costs, we have had a good many once-and-for-all capital costs. We had Cyprus once and for all for Suez. We had McKinnon Roads once and for all for Cyprus. We had Aden once and for all for McKinnon Roads. Now, of all places, once and for all we have Sharjah. It is realised that capital costs for more troops often turn out to be of a very temporary nature? If we are in- tending to reduce our Armed Forces considerably, it must be remembered that new equipment, new barracks and housing will be required here, and they will not be a permanent requirement. I ask my right hon. Friend to try and take one more look at this and reconsider it.

My right hon. Friend and I have worked together for many years, closely and well. I have a great admiration for many of his policies. However, at times I have felt that he was a little rigid. Sometimes he lacked the capacity to see the wood for the trees. Those are characteristics which, at the moment, could be tragic. What he requires is to find imagination and flexibility to seize an opportunity to deal with a situation which has arisen, not through his fault primarily, because there is fault on both sides, but because the Maltese Government have gone too quickly and got themselves out on a limb. He has to provide a ladder for them to get down from that limb, and it must be a ladder in defence terms. Economics do not affect the emotions of the situation. I beg my right hon. Friend to take that action before the consequences become tragic.

6.57 p.m.

Mr. John Pardoe (Cornwall, North)

It was not helpful to bring in a comparison with Rhodesia or Zambia. When one hon. Gentleman said that, during the war, the Maltese people had only one meal a day, the thought which sprang to my mind was that there are many people in Africa today who do not even get one meal a day. That kind of comparison is not helpful to the Maltese people or to the argument.

I stand firmly by a commitment that we want defence cuts and we want them quickly and substantially. We cannot go on affording a world peace-keeping role. But why choose Malta first? Why concentrate so harshly on Malta, when the cuts which can be made there or anywhere else in the Mediterranean are peanuts in comparison with what could be made east of Suez?

We hear talk about an expenditure of £6 million per year in Malta. I compare that with the cost of about £60 million on each Polaris submarine.

I differ from the Government in that I do not accept quite as happily as they seem to, the idea of unemployment among people, simply because they do not happen to live here. We have a responsibility for the results of our actions, whether they are done to our own people or to people anywhere in the world. I still nurse a few follies, and I believe in the brotherhood of man. I do not remember the answer to the question, "Who is my neighbour", as being "Those people who have the right to vote for members of the British House of Commons".

I do not accept the argument that we should build our hospitals on the misery of the people of Malta. In fact, if Malta were a part of this country, 15 per cent. or 18 per cent. unemployment would be totally unacceptable, and there is not a Member here who would deny that. I represent a part of this country which has a higher level of unemployment than most, but it does not approach anything like the level which will be seen in Malta in a short time if these proposals go through. I want defence cuts, but not at any price. We have to balance the savings which we are going to make against their social, economic, and emotional results.

On the question of social results, let me destroy some of the myths which seem to be going around. We have been told that the Maltese economy is resilient. I suppose that one can say that of almost any economy. But it is very difficult to create new jobs quickly enough, and it cannot be done just by pouring in more and more money. We all know, particularly those who have any experience of development areas in this country, that there must be demand for the products that one is going to create, and it is not easy to create this demand overnight, or even in a matter of two or four years. To pour in more and more money to build more hotels, more factories, and so on, will merely create a glut of unwanted services. One has to be able to sell them.

It is easy to say that one can expand the tourist industry. The fact is that it is already expanding very rapidly, but my experience shows quite clearly that the people whom the tourist industry finds it easiest to employ are the young people. Three-quarters of those who are going to be made redundant by these cuts are over 40. It is very difficult to take these people on when there are younger people competing for jobs in the hotel industry.

During the brief visit which I paid to the island as part of a delegation there was no sign that tourists would not be very welcome indeed. I am convinced that they will receive as good a welcome as we did, and I hope that everyone who is not thinking of a holiday on the North Cornish coast, will go there.

Mr. Grant-Ferris (Nantwich)

Some firms report very serious cuts in tourist bookings. One firm has reported a cut of at least 20 per cent.

Mr. Pardoe

I fear that this may be so. It is partly the result of the defence situation, but it is also partly the result of the somewhat heated political temperature in Malta. I am sure that we all wish it to be kept down for this reason, but I found nothing whatever to show that tourists would not be welcomed there, and would not have a very good holiday.

There is a myth about the increase in the population. The hon. Lady said the trouble was that the population was increasing faster than jobs. Of course, this is true, but do not let us get this out of proportion. It is an over-populated island, and they have large families, but they have had one remarkable success. By a series of amazingly successful Lenten sermons for young engaged and married couples the Roman Catholic church has managed to get the birthrate down to below what it is in this country, and when one considers the Mediterranean temperament and the religious difficulties one realises that this is a matter for considerable congratulation.

We have to balance the savings that we make against the social consequences, and perhaps I might recap on the point made by the hon. Member for Harrow, West (Mr. John Page) about the social security provisions. Unemployment in Malta is a grisly prospect. It is something which people in this country knew a lot about in the 'thirties. It is not something that we know a lot about today, because our unemployment pay levels are so much higher.

I do not want to concern myself with the method of consultation. The word "consultations" can mean anything. What unfortunately happened was that the Maltese Government wanted the verb, "to agree", we wanted the verb "to inform", so we compromised on the verb "to consult". We know what happens as a result of that kind of compromise. Each side sells it to its supporters as meaning what it originally wanted it to mean.

This agreement, dealing with defence and finance is disgracefully vague, and that is the answer to the point made by the right hon. Member for Barnet (Mr. Maudling) who said that there were assumptions of a defence expenditure underlying it. I thought that the days of secret treaties had long since gone. If those assumptions were there, they should have been written into the treaty.

Mrs. Hart

The hon. Gentleman knows that the treaty was rushed through with considerable haste during the last days of the Conservative Government.

Mr. Pardoe

I thought that the general tenor of my remarks would be clear. I am criticising the Conservative Government who made this treaty, not the present Government who, I know, have no responsibility for creating it.

I come, now, to what I believe we have to do to get the Maltese Government off the hook. We must withdraw the threat of closures until this economic study has been made. It is no good sending out a high-powered body of economists, industrialists, and civil servants, if we tell the Maltese Government that whatever they say we are going to withdraw our troops in April anyway. The withdrawals will have to depend on what that report says, whether it says, for instance, that it is possible to create the jobs which the Government say it is possible to create, and whether the levels of unemployment will be anything like acceptable. If the report says that we cannot create these jobs quickly enough, we will have to rephase the run down. I believe that the answer is to have a period of two years in which nothing happens at all, and then to start the rundown, but to do it in such a way that the major reductions take place at the end of the rundown, rather than at the beginning.

This whole Malta problem raises vast issues of how to cast off an empire, and it is proving considerably more difficult than winning one. It also raises the issue of how to cast off an old love—how to say goodbye; because even if we accept that eventually we have to say goodbye to these old empire countries, it is important that we say it with kindness, and with understanding, and my charge against the Government tonight is not so much that they have been totally wrong, but that they have been totally insensitive.

Let them for heavens sake make gestures now. They will not cost a fortune. They certainly will not cost very much by comparison with the sort of defence expenditure in other spheres which I outlined a short time ago. Let them make the gestures which will enable the Maltese Government to get off the hook, and I hope that these gestures, if and when they are made, will be received with a strength of leadership in Malta.

7.8 p.m.

Mr. Nigel Fisher (Surbiton)

I am glad to follow the hon. Member for Cornwall, North (Mr. Pardoe) who was a most charming and hard-working member of the delegation to Malta last weekend, and I must confirm what the hon. Member for Barking (Mr. Driberg) said about the strength and unanimity of the feeling in Malta which we encountered throughout the island.

The sense of shock and disillusion is very great. It is felt by the British residents on the island as much as by the Maltese themselves. Indeed, the British are very embarrassed by the present situation. It is felt and expressed by everyone from the Governor-General down to the chap who cleaned my shoes in the hotel. I was told by a distinguished historian whom I met in Malta that the island has not been so united politically on any issue since 1805, and I can well believe it.

The background to all this is the 1964 Agreement. My right hon. Friend the Member for Streatham (Mr. Sandys), who cannot be here today because he is in Germany, negotiated and signed that agreement, and in his absence I suppose that, on this side of the House anyway, I perhaps know as much about it as anyone, because I was a Minister in the Colonial Office at the time, and I remember it all very well.

The 1964 agreement was a package deal. There were many defence features about it which the Prime Minister of Malta did not like, but he accepted it as a whole after long and difficult negotiations. Some hon. Members will remember that we debated the matter just before we rose for the Summer Recess in 1964. That was because it had taken such a long time. At the end it was accepted as a package deal because of the very generous financial aid which it provided and also because—and this was the predominant point—of the high level of employment in Malta which the agreement was designed to ensure and which was one of the intentions in my right hon. Friend's mind in presenting it to Malta.

It was accepted in that spirit by the Prime Minister of Malta. We have given aid to Malta on a very good scale—£18 per head of the population. This is a higher per capita rate than for any other Commonwealth country, with the possible recent exception of Zambia. But only now, nearly 2½ years later, has Malta almost, but not quite, recovered from the first defence rundown, which began in 1959. Before that her unemployment level was about 3 per cent.—much the same as our own—but today it is still 8 per cent. because she has not quite got over the 1959 rundown. The new British proposals for withdrawal will raise the figure to 18 per cent. That is a staggering figure, equivalent to 4½ million unemployed in Britain. It is quite unacceptable and unthinkable.

Mrs. Hart

I do not want to minimise the unemployment figures, but I want to see the record straight. Our estimate is not 18 per cent. At the moment, at the end, it would be 14 per cent. [Interruption.] I know—but I did not want to allow the figure of 18 per cent. to pass.

Mr. Fisher

I know that is the hon. Lady's attitude, because I listened to the Commonwealth Secretary addressing the House the other day, and he mentioned a figure of 13 per cent. She has upped it by 1 per cent.

All I can say is that in Malta 18 per cent. was the unanimous figure given by the trade union leaders, the Prime Minister and the British High Commissioner. That figure was universally accepted. We can agree to differ, although I do not know why the hon. Lady is so pleased with a figure of 14 per cent.

Mrs. Hart

The hon. Gentleman must be fair. I said that I did not want to minimise the extent of unemployment. It is merely that I did not want to allow the excessive figure of 18 per cent. to go down on the records of the House as being the Government's view.

Mr. Fisher

I got my figures from the people of Malta. I do not know where the hon. Lady got her figures. Presumably she got them from Malta also. That is why I am surprised that she was told that it was only 14 per cent. Even that is a terrifying rate of unemployment.

As the hon. Member for Cornwall, North (Mr. Pardoe) said, men of 40 and over are very difficult to retrain in the tourist industry when they have been doing something quite different perhaps in the dockyard. They are too old to emigrate and they are too young to be pensioned off. There will be a real problem for middle-aged men of 40 and over. We must also bear in mind that the effect of unemployment in Malta is very much greater than it would ever be in this country, because Malta's unemployment benefit is so much lower than our's. It is 54s. a week for a man, for 26 weeks in the year, and 36s. a week for a woman —with no family allowances. At the end of 26 weeks the unemployed person goes on to National Assistance at 27s. 6d. a week and that is all. That means virtual destitution.

These are some of the social effects, and they are very serious in human terms. To have unemployment on that scale for a long period could lead to civil disturbances in Malta—they are a somewhat volatile people—and a consequent reduction in tourism, just at the time when tourism is beginning to gather momentum and to develop very promisingly for the island. The hon. Lady herself said that our withdrawal would lead to disastrous unemployment in Malta.

The British Government's decision was a cruel blow to Malta. They feel too that the blow was brutally inflicted. No one suggests that we have broken the letter of the 1964 agreement, but they sincerely believe—I ask the hon. Lady to accept this—that we have broken the spirit. Under Article 6 we agreed to consult the Government of Malta whenever major changes in our forces were contemplated. I agree that "consult" is a difficult word to define. It does not mean as much as "agree", but it means more than "inform". The Maltese say that they were merely informed.

The sequence of events is this: A year ago, without consulting Malta, Britain announced the broad outlines of her Defence Review. Malta protested at her inclusion, by name, in it. On 23rd February, 1966, the Prime Minister sent the Prime Minister of Malta a very reassuring telegram, in which he said that the Defence Review was a general statement of policy and that the number of men to be withdrawn and the dates of their withdrawal would be matters for subsequent consultation and, he went on: We fully abide by our obligation to consult with you when major changes in Malta are contemplated. That telegram was intended to reassure the Maltese, and it did.

The Maltese heard nothing further from Her Majesty's Government until Lord Beswick arrived with his two-year plan. This was totally unacceptable to Malta—not surprisingly—and was rejected without discussion by the Maltese. Then, on 13th January, came the Commonwealth Secretary with his four-year withdrawal plan, and, as I pointed out in an intervention, before he had even met the Prime Minister of Malta he announced to the Press at Valletta Airport that there was no room for bargaining on any major point in the scheme that he had brought. To say the least, this was a tactless and very inept way to start consultations— if one can call them that—with the Maltese Government. As a method of consultation it was very much resented in Malta. They considered that it was not consultation, but simply a diktat. They were not being consulted; they were being informed.

I turn now to the defence aspects of the new plans. The Commonwealth Secretary told the House last week that by 1970 only one Royal Air Force Squadron would be left in Malta but that "a range of defence facilities" would be retained there. Can the right hon. Gentleman explain what this "range of defence facilities" is to be? I am informed by the most senior British officers in Malta that there will be no—I emphasise the word "no"—Army or Navy personnel left in Malta by 1971, except some British Service men employed at the N.A.T.O. headquarters. What will the "range of defence facilities" consist of? I do not understand. And will they be sufficient to defend the N.A.T.O. headquarters and the territorial integrity of Malta? The Prime Minister of Malta thinks not. I asked him if there was any real threat to Malta. At the moment there is not, and he acknowledged that, but he replied, quite fairly I thought, that there had not been any threat to Malta, either, at the time of the signing of the 1964 agreement.

In fact, as the hon. Lady well knows, the Russian presence in the Mediterranean is increasing all the time. It is a great deal stronger now than it was in those days. The oil supply from Libya is also increasing, and Malta is the route through which it comes. It is certainly a British interest to keep this oil route open, to keep Malta pro-West, and to deny Malta to any unfriendly Power. That has always been British policy in the Mediterranean.

No one disputes our right to withdraw from Malta if we cannot afford to stay there, but what shall be save by going? The Commonwealth Secretary said that we would save £6 million. That is a small sum in relation to the defence budget of £2,000 million a year. The question is whether we shall save even as much as that? One can save a little, it is true, by the family passages to and fro, but not a very large sum. One can save more if one intends to disband the returning units, but, as my right hon. Friend the Member for Barnet (Mr. Maudling) pointed out, disbandment can be of any unit anywhere—so why pick on Malta, where the damage to her economy is so great?

If one is not going to disband, in what way is it cheaper to keep two infantry battalions in this country than in Malta? One saves on the Malta tail, but one would probably have to employ a certain number of people for the British tail and at much higher wages than those paid to the Maltese. I do not think there is very much saving of money there.

My hon. Friend for Harrow, West (Mr. John Page) said there were 1,500 families involved. I thought there were 3,100 families of British Service men in Malta, and I still believe that to be the figure. There are 8,000 dependants. I think the right hon. Gentleman was good enough to give me the figures the other day. There are 3,100 families to be rehoused when they come back here. That represents a lot of money. I do not know what one calculates as being the cost of a house. Perhaps it is £4,000. My hon. Friend took that as the figure. That would mean £12½ million to rehouse the families of Service men—without any extra barracks, which perhaps we do not need. The married quarters, the schools for Service children and the hospitals in Malta will be left empty and unused.

We visited one of the battalions, and saw how good the married quarters are and how happy the families of Servicemen are who are living in them. Malta is indeed a pulling point for recruitment for the British Army. People like the station and they wish to join the Army partly to experience the sort of facilities provided there. When the right hon. Gentleman spoke of saving £6 million, had he taken into account the cost of rehousing these families in Britain? The net saving may be minimal or even non-existent.

We shall lose what the commander-in-chief described to me as being the finest naval training area in the world. We shall also lose, if we go out completely, a valuable staging airfield to Africa. For an absurdly small saving —I do not know how much—we shall create a truly massive—whether 18 per cent., as I think, or 14 per cent., as the hon. Lady thinks—unemployment figure in Malta, and cause very serious damage to Anglo-Maltese relations, which have been so good for so long.

Will not the Government think again? Will not they talk again with Malta? Will they genuinely consult with Malta—whatever the argument about consultation, that is all in the past about the re-phasing of our withdrawal over a longer period? It would make all the difference to Malta if we could phase over six or seven years instead of four, and if we could have the hump, the big withdrawal, towards the end of the period instead of at the beginning, when they have not yet quite got over the 1959 defence rundown?

I do not condemn the Government for their position. I understand it very well. That is why I did not feel inclined to sign the Conservative back bench Motion on the Order Paper. I do not condemn the Government at all. I just implore them—and I mean this very sincerely—to add up again the net saving, to consider the really calamitous effect upon Malta and upon our relations with Malta, and see where the balance lies. Even at this hour that could be done. Only a few days remain.

If the Government agree with the view of hon. Members on this side of the House, and with the view of the hon. Member for Barking (Mr. Driberg) and the hon. and learned Member for Northampton (Mr. Paget), that something should be done, then it would be splendid if we could make the magnanimous gesture of inviting Dr. Borg Olivier to London for talks. There is need for statesmanship and for imagination. Let us give the lead, which, essentially, must come from Britain, and then I believe this problem can be solved. I do implore the right hon. Gentleman to take the suggestion seriously, because if he does not do so, it may mean the end of our good relations with Malta, and it may be a catastrophy for Malta, to which we owe so much.

7.25 p.m.

Mr. Hugh Jenkins (Putney)

I hope that my right hon. Friend the Secretary of State for Defence will reply to some of the very interesting points which have been made by hon. Members on both sides of the House who have recently visited Malta.

I apologise for intervening in the debate as one who has not been to Malta for the last two or three years. However, it is possible that those hon. Members who have so recently come in touch with the problem there may have, as it were, solidified their arguments. The House will appreciate that they have fallen into two groups. There have been those whom we might call the "maintainers" and those whom we might call the "replacers". I am on the side of the replacers. The "maintainers" are those who feel that, for one reason or another, it is essential to retain the base in Malta; the "replacers" are those who feel that our task is not to remain, but that we should make a very effective and massive financial replacement.

My quarrel with the Government is not that they have decided to run down the base in Malta and to withdraw our troops, but that their proposals for mitigating the consequences of the withdrawal are insufficiently imaginative and quite inadequate. Not enough has been heard of the views of the Malta Labour Party. I should like to quote from a letter I received from the leader of that party, Mr. Dom Mintoff, with whom I have been keeping up a fairly regular correspondence in recent years. Referring to the Financial Agreement of 1964 he says: By virtue of the Financial Agreement, Malta is receiving aid from Britain to help her change her economy from garrison to normal production. It was envisaged at that stage that the process of change should take place, and what has been happening is an acceleration of that process.

It is not within the bounds of possibility that the process should be held up or reversed. What we are seeking to ensure is that the people of Malta should be cushioned more effectively from the consequences of the Government's present proposals, and we must ask the Government to give more serious consideration to this.

Mr. Dom Mintoff points out that the help provided under the existing agreement has been inadequate. He argues that during this period the abnormal unemployment figure of 9 per cent. was due in part to the inadequacy of that Agreement. He places some of the blame on the Government of Malta. The view of the Malta Labour Party is that independence for Malta is a mockery while it retains a British base there. He says: This fact is recognised by all the sections if the Maltese people…the reactionary rich, look upon the base as the best guarantee against any serious social upheavals. Others, like the workers and trade unions, can't ignore the employment factor: there are 8,000 workers directly employed by the British Defence Departments. Should the latter become redundant, there is no alternative employment for them and they will be thrown into the social scrapheap. It is not necessary to explain to you why Malta's long-term interests cannot tolerate a base. But at the moment it is a necessary evil. This is why there is this degree of apparent agreement between the two parties which have been so long and bitterly opposed. Beneath that surface agreement there remains a fundamental cleavage. They agree that Her Majesty's Government's approach has been utterly inadequate but there is a difference between them as to what the alternative should be.

Broadly speaking, the Malta Government take the view that the base should be retained over a longer period. The Malta Labour Party—which, I remind my right hon. Friend, constitutes a very large section of opinion in the island, has been the Government and will, I hope, become the Government again before long—has views in relation to the planning of the resources of Malta which are much more in line with Her Majesty's Government's own views and are much more likely to make effective use of aid which we bring to Malta than the present régime.

For this reason, I urge my right hon. Friend, when he sends whoever he is to send, whatever delegation or expertise, well-qualified people—and it is extremely important to provide Malta with a kind of brain drain so that we can assist and provide them with training—to realise that the fundamental need in Malta is for capital investment for adequate financial protection for those who will inevitably be displaced and for adequate retraining in alternative occupations.

It is on these lines that I hope that my right hon. Friend will respond because if, as a result of the Government's action in relation to Malta, either the figure of 18 per cent. unemployment or even the lesser figure of 14 per cent. comes about and remains for a considerable period, Her Majesty's Government will not only be disgraced in Malta but disgraced in their own eyes and in the eyes of their supporters here.

7.32 p.m.

Mr. J. Enoch Powell (Wolverhampton, South-West)

One fact emerges with stark clarity from the scene which the House has been contemplating in the course of this debate. It is a fact which had been recognised, though in different words and with different emphasis, by almost everyone who has taken part. It is that the Government have made a terrible hash of our relations with Malta.

The Government's decisions, the way those decisions are to be applied, the way they have been conveyed and notified, have resulted in a state of antipathy between this country and Malta which is unparalleled in 150 years of our history together—one which has, wisely or unwisely, impelled the Government of Malta to be in course of actions which, as the Minister of State said, would make the position of our forces virtually untenable.

It is the result of the Government's actions so far that those establishments which they themselves believe will be needed in Malta indefinitely, the value to us and to our allies which they themselves believe Malta still has and will long continue to have, is today, almost at this hour, in jeopardy of being wholly thrown away.

Many who have spoken have deprecated—and it is natural and right that we should in this House and at this distance deprecate—the haste and the violence with which the people and the Government of Malta have reacted. But looking at it from their point of view, it is not difficult to understand why. In this House and in this country we have got to try to put ourselves for a little in their place. Perhaps I may once again quote the words of that Agreement, which is of supreme importance to the Government and the people of Malta. It says: The Government of the United Kingdom will consult the Government of Malta when major changes in the British forces in Malta which might have significant effects on the finances or economy of Malta are contemplated. Now there can be, I admit, minds to whom those words would mean that the Government of the United Kingdom "will, just before public announcement, inform the Government of Malta when major changes, etc., have been decided upon and are about to be published." That is the sense in which they have hitherto been interpreted by Her Majesty's Government. We know as a fact that when the White Paper of 22nd February last year announced that there would be substantial economies in our contingents in Malta and that the Government intend…to enter into consultations …for a reduction of British Forces in the next few years —the first intimation of this intention, of this conclusion of the defence review, came when the British High Commissioner delivered the extract from the White Paper on the eve of its publication.

So that was the first link in the chain of events during these last 12 months which has led us to where we are today. But then, as my hon. Friend the Member for Surbiton (Mr. Fisher) told the House, the anxiety was assuaged. After all, the White Paper only referred to a reduction of British Forces in the next few years". It was all very vague. The right hon. Gentleman the Prime Minister assured the Government of Malta that there would be a long time to think and talk about this —and, of course there would, as usual, be full consultation.

The next event was the arrival in Malta of Lord Beswick in August last year. Why in August particularly? Because in July, the Government had discovered that our economy had been blown off course. They came to the House on 20th July with a series of hastily-taken panic measures, one of which was a reduction of £100 million in overseas expenditure, mainly defence expenditure, secured by bringing forward actions which would otherwise have been taken over a much longer period.

The Prime Minister assured the House that these items which added up to £100 million had already been decided upon. May I remind the House of his words? He said: The Government have decided on firm programmes which will reduce our overseas Government expenditure, military and civil, by at least £100 million."—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, c. 632.] We were afterwards told that that was to be by the next financial year. So the Government had taken decisions. When the noble Lord went out to Malta to tell the Malta Government that the run down was now going to take place in only two years, his function was to communicate something which had already been decided. The Maltese were now being told of their part in the £100 million package. They were being told where they stood in the list which the Government had already compiled.

Naturally, there was a violent shock and reaction at this wholly unexpected interpretation of what they had been led to understand was implied by the result of the defence review as announced in the White Paper. As we have been reminded, Dr. Borg Olivier came to this country and saw the Prime Minister here. Months passed. We come to January of this year. Time was now pressing for the Government. After holding out on this House month after month and refusing to give any details of the contents of that £100 million package, the Secretary of State had at last said that the particulars would be given in the defence White Paper in February. So something had to be done about it.

The Commonwealth Secretary went out to announce a third and final diktat and, on arrival at the airport in Malta, stated that "there was no room for bargaining" as far as the major points of the proposals he was carrying were concerned. It was a piece of delicacy and tact which would hardly excite admiration on the part of a rhinoceros. So the people of Malta were told for the third time what had been decided about them. For the third time, they had been consulted.

What they have now been told would have the effect upon them, in the Government's own opinion, that there is bound to be increased unemployment as a result of this rundown, which will be higher during the first two years—".—[OFFICIAL REPORT, 24th January, 1967; Vol. 739, c. 1277.] As to the scale, there is a disagreement of only 4 per cent. between the 14 per cent. from the Government and the 18 per cent. from the Government of Malta, in the estimate of what it means for the Maltese people. The programme had been arranged in such a way—one understands the right hon. Gentleman's reason for arranging it in such a way—that the maximum impact would fall in the first two years. But that, of course, is exactly when it would have the maximum unfavourable impact on Malta and be hardest for the people of Malta to digest.

We have not yet been told in the House —we must be told tonight—what is the budgetary saving from these measures, what the taxpayer in this country is saving, so that he can consider whether it is worth while. The Commonwealth Secretary did not tell us this in his Statement last week. He told us that there would be a reduction of £6,500,000 per annum by 1970 in British defence expenditure in Malta".—[OFFICIAL REPORT, 24th January, 1967; Vol. 739, c. 1274.] Yes, of course, but that is not the vital figure which we must know.

What we must know—preferably for each year from now to 1971—is the net budgetary saving to this country. This is not to dismiss the importance of expenditure which is in overseas terms, although the importance of that, on the Government's own showing, is rapidly diminishing as they move, so they tell us, into a period not only of equilibrium, but of favourable balance of trade. We have to come back to the basic question which underlies all defence decisions: the way in which the nation's resources shall be directed. That shows up in terms of budgetary expenditure. We must be told the size and the urgency of this budgetary saving which decrees that we shall impose these hardships upon the Maltese people, so that we can decide whether it is impossible to do this in a way which will not provoke such deep and—it will be—lasting antagonism in our relations with Malta.

The appeal which we on this side make to the Government—this is why we are not seeking to divide the House tonight—is to realise the urgency of some new decisions by them, and the profundity of people's feelings. There has been sentiment in this matter. Of course, there is sentiment, where this country and Malta are concerned. There is nothing wrong in that, nothing to be ashamed of. We all have our sentiments—I have my own personal memories—where Malta is concerned. But there is more to it than sentiment, and certainly more than sentimentality. It is a question of the way in which a great nation should comport itself towards a very small nation. We are asking the Government to have the magnanimity, worthy of a great nation, once again to modify their intentions out of consideration for this tiny people who, at this point, are virtually at our mercy.

Above all, we ask that there should be no more threats. There have been too many already. Some were implicit—I was glad that she did not go so far as to spell them out—in the hon. Lady's speech. She seemed to be surprised when my right hon. Friend said that we had threatened not merely that we would not be able to retain defence installations in the islands, but that we would not be able to continue the aid programme. That is precisely what the Government have threatened. In a statement issued by the Commonwealth Office, her own Department, on 27th January, the Government said: Their obligation"— that is, the British Government's obligation— to provide the balance of this aid during the final seven years of the agreement is dependent on the continued operation of the defence agreement. This is not the way in which the Government need to talk or to think in these next few critical days. We are called upon not to think rigidly, still less to think like a nation which need not take account of such minor matters. We are called upon so to comport ourselves towards Malta in these days that we shall not be ashamed in the future.

7 48 p.m.

The Secretary of State for Defence (Mr. Denis Healey)

This has been a serious and sombre debate and, if nothing else, has revealed the deep and sincere feeling on both sides of the House about the present situation in Malta. I know that the feeling in the House is shared by many people in the country and it is nothing compared with the emotional feeling in Malta itself. I will try to deal with the problem which we face with the seriousness it deserves. I will try to deal with the many points of substance raised by right hon. Gentlemen opposite and by speakers on both sides.

I would make one simple and, I hope, not controversial point. The problem which we face today in Malta presents, in an acute form, the problem which is bound to be raised by any attempt to cut Government expenditure overseas—in particular, to cut Government expenditure on defence. To save money for the British taxpayer—as the right hon. Member for Wolverhampton, South-West (Mr. Powell) pointed out—means taking money away from somebody who is now receiving it. That is just as true of saving in foreign expenditure as of saving expenditure in this country.

With aspect, to some who have spoken, it is totally irrational to ask for cuts in expenditure and ask that they be made without imposing any disagreeable consequences on anybody at all. That is not possible. The problem is a peculiarly acute one in saving money on the stationing of forces overseas because in this case one is taking away jobs as well as money.

An essential problem of the Maltese situation—which has made it so difficult to handle—is that it concerns people's jobs and not just the amount of economic assistance or aid received by a foreign Government. I must remind the House —hon. Members on both sides, not least the right hon. Member for Wolver-hampton, South-West—that this problem we now face in Malta, will be faced in quite as acute a form, and on a very much larger scale, if we reduce the facilities we now enjoy outside Europe; in Aden, Hong Kong and Singapore. Hon. Members who ask us to reduce those facilities have a duty to tell us how they would propose to reduce them in time, without encountering the sort of difficulties which we face now in Malta.

Mr. Driberg

And Germany?

Mr. Healey

Germany, too. I shall try to deal with all these points.

My second point of a general nature is this. We are sometimes asked why we cannot make savings faster. At Question time I am repeatedly asked this question. Anybody who listened to the accurate and painstaking account given by my hon. Friend the Member for Lewisham, West (Mr. Dickens) of our conversations with the Maltese Government over 12 months about this problem, will know how difficult it is to carry out satisfactory consultations, even over a long period of time, about a problem which concerns the livelihood of thousands of people.

Much has been said—and rightly so in a debate of this sort—about the special moral claim which the people of Malta have on the loyalties of the people of Britain. I certainly accept and recognise that claim. Of course, Her Majesty's Government have recognised it, not least by giving to Malta almost the highest per capita aid any country in the world is receiving from Britain. Malta is receiving £18 per head in aid from Her Majesty's Government, leaving aside all the money that Malta receives, and will continue to receive, from the stationing of British forces there. That £18 per head in Malta compares with only 6s. 8d. per head in Singapore, which relies no less than Malta on the presence of British forces and which contributes a great deal more than Malta at the present time to the military capability of our defence.

Mr. Patrick Wall (Haltemprice)

Would the right hon. Gentleman not agree that this money was given to Malta to compensate for a previous rundown, between 1961 and 1967, which has already created 8 per cent. unemployment in Malta? Surely he is now creating more unemployment but without making available any more money?

Mr. Healey

I shall be dealing with that and similar questions. The reason why we decided to spread the rundown, which we had planned for two years, over four years, was because we recognised the special claims of the people of Malta for our consideration. I must remind the House that this two years' delay in the completion of the rundown is going to cost the British taxpayer £5 million, or 25 per cent., of the total saving over the four-year period. This is an indication of the importance which we give to the problem. I shall deal in some detail with the points raised by the right hon. Member for Barnet (Mr. Maudling) on the nature of the various economic savings which Her Majesty's Government expect to get from the rundown.

Mr. Powell

The right hon. Gentleman referred to £5 million. Would he make it clear whether that is an annual figure or a once-for-all one?

Mr. Healey

The £5 million is a loss over the four-year period. It is distributed differently in various years but the loss falls entirely over the last two years, when otherwise the defence rundown would have been completed. I hope that hon. Members will have patience and allow me to get on with my remarks. I will be dealing with the points which have been raised about the economic savings which will be made. If hon. Members are patient, they may see that I will answer the questions they have in mind.

There are two sorts of saving which we expect from this rundown. First, the budgetary saving to the British taxpayer and, secondly, the relief for our balance of payments, both of which are vitally important. The right hon. Member for Barnet, as a former Chancellor of the Exchequer, will recognise this. The budgetary saving and the saving on foreign exchange, on balance of payments, are, by a coincidence, both about the same. [Interruption.] I hope that hon. Gentlemen opposite will have patience and listen to what I have to say. The budgetary saving will be slightly under £6 million a year, when the rundown is complete. The saving on our balance of payments will be slightly over £6 million a year when the rundown is complete. I will explain exactly how the budgetary saving is made up because many questions were asked about this.

The disbandment of the Royal Malta Artillery will save £1,300,000 on the budget, after allowing for the replacement of Royal Malta Artillery personnel in Germany by members of the Royal Corps of Transport. There will also be a saving, as one hon. Member suggested, of just under £1 million on the return of the two Army battalions and other Army troops to Britain. That is because it is very much cheaper to keep troops in Britain than to keep them abroad, not only because of the transport costs but also because the overheads are very much smaller when troops form part of the very large and well-organised body of servicemen in this country, rather than when they are kept overseas and are the only people there; in other words, when they must provide their own overheads, The total budgetary saving on the withdrawal of Army troops will be £2.2 million.

On the Royal Navy, the saving will be £2 million budgetarily. Again for the same reasons; that it is very much cheaper to keep Naval personnel and their families in the United Kingdom than to keep them overseas. I must admit that one reason for that saving is that it is possible that our Forces in Malta have been employing more local personnel than was strictly necessary, in order to aid the Maltese economy while they were there.

There will be a saving of £1,750,000 on the move of Royal Air Force units because these, or some of them, will, in the main, be disbanded completely, so that the total budgetary saving will be just under £6 million. It will be £5.95 million. Oddly enough, this comes very close to the figure which the hon. Member for Harrow, West (Mr. John Page) suggested, when he calculated a saving, on figures with which I could not wholly agree, of £8½ million per annum, minus an amortised portion of redundancy payments and building payments in this country, which he calculated as being about £9 million. All the factors to be taken in to account will be reflected in the Estimates. I assure hon. Members that when this year's Estimates are published, they will see the distribution of savings over the next 12 months listed in detail; there will be the saving on the budget. Saving on the balance of payments, as the right hon. Gentleman said, is quite another matter.

Mr. Powell

Before the right hon. Gentleman passes to the overseas account, could he say whether there are any capital sums which one way or another fall to be taken into account?

Mr. Healey

Yes, Sir. There will be a small capital sum of something over £1 million redundancy payments to locally employed personnel, and then a capital sum to take account of incidental rehousing of forces in this country. I am not in a position to give this in detail—[HON. MEMBERS: "Oh."] I am prepared to have the accounts scrutinised when they are presented in the normal way to Parliament, but the figures I have given the House are those on which I am prepared to stand.

Mr. John Page

It is not satisfactory to say that we can wait a long time to get these complete figures. The right hon. Gentleman is making a case which has to be seen and made quite clear to all of us today. The figures of the returning families were clearly known to the Government of Malta and to all the Service chiefs in Malta. Surely they ought to be available to him because they set exactly the rate at which families will come home and ought to be rehoused.

Mr. Healey

Yes, but I am prepared in this argument to stand exactly on the assumption which the hon. Member has himself made. Accommodation for families in this country by buying houses or caravans or whatever it is, is a once- for-all operation and therefore it has to be amortised in some manner, even if it is over four years which is a short period. That would be an annual offset of £2¼ million and would bring out a total budgetary saving slightly higher than the one I have given to the House.

The saving on balance of payments is a saving of expenditure by the forces in Malta and that part of the Royal Malta Artillery serving in Germany at present, which will be replaced by members of the Royal Corps of Transport. The saving here is slightly over £6 million, and this is a figure readily calculated by setting the number of people withdrawn against the present expenditure, which is known.

I do not think any hon. Member has wished to contest this figure but questions have been asked as to whether this is really of assistance to our balance of payments. First, if expenditure by the Government, or as a result of Government action, in the sterling area were not a charge on the balance of payments, we would not face the need to cut £100 million in Government expenditure overseas because the overwhelming bulk of Government expenditure overseas, is in the sterling area. In the defence field, over half is in the sterling area, very much of it outside Europe or "east of Suez" as is sometimes said.

The right hon. Member for Barnett, as an ex-Chancellor, knows perfectly well that British money spent overseas bears directly on the British balance of payments because it creates a claim on British exports. The right hon. Member asked a lot of questions about the sterling area balances. Of course it is true that expenditure in the sterling area does not fall as directly on our gold and foreign currency reserves as expenditure outside the sterling area, because members of the sterling area hold sterling balances, but it does represent a claim on our reserves of gold and foreign exchange and as such, it is inevitably taken into account by our foreign creditors.

That is the reason why the Government decided last year that in the serious economic situation we faced, when there was a serious run on sterling, we must find a way of cutting our expenditure overseas whether in the sterling area or not. I hope the right hon. Gentleman is not going to contest the need for this, or claim that expenditure abroad in the sterling area does not affect our balance of payments because, if he is to claim that, I understand a great deal more about the fate of our finances under the party opposite than I have understood hitherto.

Mr. Maudling

If I may make a serious interjection, the extent to which expenditure in the sterling area affects our balance of payments and the position of sterling is affected by the extent to which that is matched by additional imports from this country and in the case of Malta it would be entirely so matched.

Mr. Healey

This applies equally to expenditure outside the sterling area, and it depends on how much we expert to the country. The unrequited expenditure leads to unrequited exports. If the right hon. Gentleman does not understand that, I am slightly surprised.

Sir A. V. Harvey

rose—

Mr. Healey

I have given way a great deal and it is already past 8 o'clock. I have a lot of important questions to answer.

Sir A. V. Harvey

I am obliged to the right hon. Gentleman for giving way. He referred to the Royal Malta Artillery. I cannot dispute his figures, but on the home side with two battalions, one in Germany and one in Malta, what will be the effect bearing in mind that Malta cannot contain the Army itself? Are they to be thrown away like old gloves?

Mr. Healey

They will not be thrown away like old gloves. They will get the redundancy payments which are appropriate, and their numbers must be added to the total of people who become redundant as a result of the cuts. I shall deal with that side of the problem.

I make only one point on the monetary saving, in addition to what I have said, in answer to the hon. Member for Cornwall, North (Mr. Pardoe), who suggested that Malta was the first country from which we were withdrawing forces under the Defence Review. He asked why we were starting with Malta. But we are not starting with Malta. We shall have 10,000 brought home from the Far East before the first person leaves Malta under the run down decisions, and that run- down is continuing all the time. Details of it will be given in the statement on the Defence Estimates in a short time.

Mr. Pardoe

What proportion do those 10,000 represent in the total forces in that area and what proportion do the withdrawals from Malta represent in the total forces in the Mediterranean area?

Mr. Healey

I cannot give that in detail without notice.

Mr. Pardoe

I can.

Mr. Healey

I am glad to hear that the hon. Member can do so. He deserves great credit for his researches, but this is totally irrelevant to the point I am making. We are trying to make savings all over the world at present, and we regret to say that our presence in Malta has to make a contribution. I do not think most hon. Members, although one or two did say this, would want us to keep soldiers, sailors and airmen in Malta if we did not need to keep them there and it was causing us to spend money on defence which we did not require to spend for defence reasons. I think my hon. Friend the Member for Lewisham, West spoke for most of the House when he said this. [HON. MEMBERS: "Oh."]

I must say a word or two here about the British military need [Interruption.] I thought that many hon. Members opposite who spoke in the debate seriously wanted information; I hope that they will listen. I want to say a word or two about the nature of our military needs in Malta and how they are affected by the proposals which we have put to the Maltese Government.

Britain's military need for facilities in Malta, as hon. Members know, has been steadily declining ever since the end of the Second World War. At the present time the principal military need is for staging short-range aircraft which cannot make the longer hops on the way to Africa or the Middle and Far East, which the long-range aircraft make. This of course adds considerably to the flexibility of our air power, but the Maltese base is not indispensable even for this purpose. If by any chance we lost the base, although we would have to revise some of the plans we have for carrying out some of our existing military tasks, we would be able to develop new plans for carrying out those tasks.

There are certain other facilities also which we wish to keep, and which we shall keep, under our proposals—I will mention them in a moment—though they are not so important as is the usefulness of an airfield through which we stage the shorter range aircraft like Argosies, Beverleys and Hastings.

Malta is not important for training, although naturally, since we have been there, we have used it as much as we could. Naval training can be carried out from ships almost anywhere in the world, and we have other facilities in the Mediterranean. The Army in Malta in fact does not train there. It trains in Libya, not in Malta. The Air Force will be staying in Malta to some degree, and we shall retain the staging airfield there.

Our ability to defend Malta is not affected by the reductions we plan. Hon. Members on both sides know that we have commitments and obligations to defend many places where we do not keep any troops permanently. We have very serious responsibilities, for example, for the defence of a whole range of Commonwealth territories in the Pacific, the Indian Ocean arid the Caribbean, which we are perfectly capable of carrying out at need by flying, or sailing, Forces out there when the need arises.

But if we are to fulfil our obligation to defend Malta, what is vital is our ability to reinforce in Malta when needed. This is one of the reasons why we feel it necessary, not only to keep an airfield for peacetime staging, but also to keep another airfield on a care and maintenance basis and to keep certain naval base installations on a care and maintenance basis as well. That means that, when the run-down is complete, besides there being a substantial force of Royal Air Force personnel on the island, there will also be 500 members of the Royal Navy. I say that in answer to the hon. Member for Surbiton (Mr. Fisher).

I do not believe that anybody argues on military grounds that our ability to fulfil our commitment there is jeopardised by our proposals, though undoubtedly it would be jeopardised if events took such a turn that we were required to leave the island altogether. That is one reason why the Conservative Government made their Defence Agreement with Malta conditional on the retention of certain facilities on the island.

Under our rundown plan, about 3,000 men of all three Services will stay in Malta until the autumn of 1970, and rather less than half that number thereafter. My right hon. Friend the Secretary of State for Commonwealth Affairs has assured the Malta Government that, should the assessed threat to Malta increase in such a way as to throw any doubt whatever on Britain's ability to discharge her obligations under the Defence Agreement, the British Government would unhesitatingly reconsider the rundown and, if necessary, reverse it.

A question was asked about N.A.T.O. The N.A.T.O facilities in Malta are not at risk, so long as the British personnel in the N.A.T.O. installations—because we make a substantital contribution there —are allowed to stay. N.A.T.O. was fully informed of our intentions regarding the rundown in Malta and has raised no objection to it.

If hon. Members are fair, I think that they will recognise that the real concern lies over the economic consequences of the rundown rather than on the implications of the rundown either on our own defence requirements or on our ability to implement our obligation to defend Malta.

I want to try to put this problem into perspective, and I do not want to underestimate its importance. The rundown in Malta has been continuous since 1957. Already 12,000 Maltese have been made redundant by the British rundown, planned by the Tory Government over the last ten years—12,000 over 10 years. The new rundown will involve redundancies of about another 6,000—slightly more—over four years. In other words, the rate will be slightly greater than it has been on average over the last ten years.

If all the people who became redundant failed to find other employment, this could increase unemployment to the—I agree—appalling rate of 14 per cent., but there is no reason whatever to believe that none of those who become redundant will get new employment. On the contrary, as my hon. Friend the Minister of State said, the Maltese economy is a thriving economy, although it faces an enormous demographic problem—a birthrate, for example, which adds to the population at the rate of 3 per cent. per year. But the number of jobs in Malta has already doubled in the last six years.

It is very interesting to compare what really happened as a result of the last rundown with the estimates which were made. As I think has been pointed out already in the debate, the joint British/ Maltese assessment in 1962 was that the rundown over the four years terminating in March this year would result in an unemployment rate of between 20 per cent. and 30 per cent. The Tory Government were prepared to put forward proposals on the basis of such an assessment. In fact, thank God, it did not have consequences that were anything like as severe. The unemployment rate has never risen above 9 per cent. during this rundown, and at the moment it is running at about 8 per cent.

Again, the assessment was made by a joint working party in 1962 that the G.N.P. as a result of the rundown would fall by 15 per cent. In fact, it has risen by between 5 per cent. and 6 per cent. in the intervening years.

I do not want for one moment to suggest to right hon. and hon. Members that Malta will not face a serious problem of unemployment as a result of the rundown. It would be dishonest to claim that. However, I honestly believe that the problem will not be anything like so serious as it has been painted, providing that we all get together to try to do what we can to ease the consequences.

A great deal has been said in the debate by hon. Members on both sides asking Her Majesty's Government to reconsider their decision on the Defence Review rundown. I do not think, however, that it would make sense to go further on that side of the problem than we have already. We are already in fact charging the British taxpayer £5 million to keep troops in Malta whom we do not need to keep there over the next four years.

My hon. and learned Friend the Member for Northampton (Mr. Paget), in an intensely moving speech, made the accusation that rigidity was my besetting sin. Coming from him, that is a serious accusation. I have used what influence I can and what thought I can to see ways round this problem. I believe that, if the Maltese Government can be persuaded to accept the proposal which we have made of sending a high-powered industrial team to advise on more rapid development of Malta during the period of rundown, this can have an immense impact on the situation.

I want to make this clear to my hon. Friend the Member for Barking (Mr. Driberg), who made a notable speech, as well as my hon. and learned Friend the Member for Northampton and the hon. Member for Cornwall, North. There will be no physical withdrawal of troops from Malta under the Government's Defence Review proposals until May this year. I am confident that, if the Malta Government accept our proposal, we shall be able to get a team out there to get a valuable report in time for it to be considered by both Governments before the rundown physically proceeds.

I know that many people will feel that this proposal in itself is not enough to meet the whole of the problem, but I very much hope—I say this seriously to hon. Members on both sides—that those who have influence in Malta will do their best to urge the Malta Government to accept it and, if necessary negotiate with the British Government about some of the details, for, as has been well said on both sides, the situation is very serious.

Perhaps I could now give the House a few details about the impact of the situation on our forces in Malta to date.

Mr. Paget

Before my right hon. Friend leaves that point, will he go a little bit further? It might be vital. The rundown is not to start until May. Could he say that, until then, reconsideration is always possible and could depend upon what the Commission said? If he could say something like that, it might just give a chance.

Mr. Healey

I am afraid that I cannot in this House now go beyond what I have said, but I hope that those who are familiar with this sort of situation will recognise that there is an opportunity here for second thoughts on both sides. If I may say so to the right hon. Member for Barnet, who made, as always, an interesting speech, if uncharacteristically immoderate in its opening passages, there is certainly scope for thinking again, but it is not only on one side. I felt that he was less than just to the British Government, in failing to make any hint or suggestion that the Malta Government should reconsider the situation.

Mr. Maudling

In response to the cogent point put by the hon. and learned Member for Northampton (Mr. Paget), the Secretary of State said that he is not in a position to answer and accept it now. Is he prepared to say that he will, with his colleagues, consider whether it could be accepted?

Mr. Paget

It is a critical 24 hours.

Mr. Healey

I understand this very well, and I beg the House to believe that I am doing my utmost to help the situation along in the way we all want to help it along. What I can say is that there are three months between now and the physical commencement of the rundown. I hope that, if the proposal is accepted by the Malta Government, there will be plenty of time for the Commission to make its report and to have the report considered. I cannot at this moment go beyond that.

Mr. Driberg

rose—

Mr. Healey

With respect, no. I want to conclude because I have spoken for far too long, and I am grateful to the House for its indulgence in allowing me to do so.

I conclude with this point, and I beg those hon. Members who have influence in Malta to consider it. So far, the impact of the situation on relations between the Maltese and British Service men in Malta has not been disastrous, and I am very glad to tell the House that the Malta Government have stressed that their quarrel is with the British Government and not with the people of Britain. There continues to be a sharp distinction between Maltese harassment of our Service organisations under the pretext that we have forfeited our rights under the Defence Agreement and, on the other hand, Maltese treatment of our people as individuals, which continues to be both courteous and friendly.

There has so far been no violence or threat of violence, and I am sure that the Malta Government would wish this to continue. We on our side will do everything possible to prevent a sharpening of the conflict, to prevent a rise in the temperature, because the situation is indeed critical.

I do not want anyone, least of all in Malta, to underestimate the gravity of the situation. If the Malta Government make it impossible for us to stay, we should have to go. In my view, such a situation would be a political tragedy for this country and it would be a military inconvenience. But for the people of Malta it would be a total catastrophe.

Mr. Driberg

May I put this question to my right hon. Friend before he concludes? I was very glad to hear him say that there is room for second thoughts on both sides. Does he mean that those second thoughts could cover some possible rephasing of the operation within the four years?

Mr. Healey

I can give no such undertaking at this moment.

Mr. Ernest Armstrong (Durham, North-West)

I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.