DEFENCE

HC Deb 27 November 1967 vol 755 cc43-170

3.52 p.m.

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

The object of the debate this afternoon is to consider in as much detail as possible the impact upon defence policy and defence preparations of the devaluation of the £ and the surrounding decisions which have been announced by the Government.

The Chancellor of the Exchequer told the House a week ago of the Government's broad intention. He did so in terms which, financially at least, were clear and precise. There was to be a net reduction of £100 million in the projected defence budget for 1968–69. That is not, of course, a reduction on what is being spent this year. It is a reduction on what would otherwise have been proposed to be spent in the coming financial year.

The Chancellor also made it clear that it is a net reduction in the sense that there is to be that reduction of £100 million even after account has been taken of the increases in expenditure next year involved by devaluation, both by way of the increased costs of purchases in the defence budget and the increased cost of pay and allowances to our forces overseas.

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

I would not like the right hon. Gentleman, because of any misunderstanding, to mislead the House on this crucial point. My right hon. Friend the Chancellor of the Exchequer said exactly the opposite. He said that the cuts would involve the cancellation of certain programmes, although there would be some offsetting transitional expenditure and an increase in sterling terms in the cost of purchases overseas and the pay of our troops. In other words, he made it clear, as did the Prime Minister later, that those offsets were not included in the £100 million saving.

Mr. Powell

In that case, I must withdraw the enconium of unambiguity which I bestowed upon the Chancellor's statement. I have it in front of me. While we are obliged to the Secretary of State—this is an important point, and it is a good thing to have it made clear at the outset of the debate—I must point out to the House that the material words by the Chancellor of the Exchequer were: we are satisfied that the reduction of £100 million in the Budget planned for next year can be made within the framework of the defence policies announced last summer. He went on to say that the cuts would involve certain reductions. although there will be some offsetting transitional expenditure and an increase in sterling terms". [OFFICIAL REPORT, 20th November, 1967; Vol. 754, c. 937–8.] At least one natural interpretation of that statement was the one which not only I have just mentioned, but that which has been almost universally taken in comment from that time till now.

However, we have cleared up the first unclarity in the Government's position. There is not a reduction of £100 million net of extra expenditure, in the defence budget next year; there is a reduction of £100 million apart from the increased expenditures due to devaluation. Perhaps the Secretary of State, when he replies will give the House an indication of his present calculation of that latter magnitude, because estimates have varied from his own, which he gave provisionally on television, of up to £25 million, to as high as £60 million. The effect of these cuts will depend very much upon the magnitude of the offsetting expenditures to which I am referring.

There is one point about those offsetting expenditures which should be cleared up without delay. They consist, as the Chancellor indicated, of two elements: one, purchases of material, equipment, and so on; the other, the adjustment of payments made to our forces overseas. At the moment there is, I believe, only a provisional arrangement that from week to week the cash in foreign currency terms will be as it was before devaluation; but it is clearly essential that our forces should as soon as possible know exactly where they stand.

What the Secretary of State was able to say last week on this subject when he was interviewed on television was rather disturbing. When he was asked whether the troops overseas would suffer financially because of devaluation, he replied: I am very concerned about this, and I am concerned to see that they suffer, at any rate, no more than their civilian colleagues in this country, and I am negotiating with the Chancellor about it at this moment. We on this side are very concerned to see that the forces overseas are not in any way unfairly affected by what has happened. The most precise statement should be made about this as early as possible.

As to the content of the cuts, there has so far been little detailed explanation of the Government's proposals. Taking in order those which we have had to date, there has been the decision not to proceed with the Aldabra project. It is difficult to suppose that there can be a very big financial element involved here in the financial year 1968–69. As recently as 10th November, the right hon. Gentleman asserted that no decision on this subject had yet been taken. Indeed, in his reply to the Royal Society in May, he looked forward to a possible lapse of anything up to a year before that decision was taken.

It may be that some minor expenditure might anyhow have been incurred in surveys or otherwise during the coming financial year, but it is difficult to believe that before the decision had been taken by the Government the Chancellor of the Exchequer would have included in the projected defence budget for 1968–69 any substantial expenditure on the development of the staging post. So for financial purposes, though the Government may have found this a convenient opportunity to announce a conclusion to which they had come, this decision, at any rate, is barely relevant.

Then we come to the cancellation of the 15 American helicopters and the eight Buccaneer aircraft, which latter cancellation, I understand, hangs together with the decision taken about H.M.S. "Victorious". Here again, we have not yet had any precise estimate of the net saving involved, net after cancellation charges; but estimates have unofficially been given in the region of £15 million or £17 million.

The last single substantial cut which has been mentioned is the decision to omit from next year's budget one year's operation of the aircraft carrier "Victorious"; but, of course, the saving which will be involved in doing this is nothing like the cost of a year's operation of an aircraft carrier, since the entire crew, unless there is to be an accelerated rundown of naval manpower, must presumably continue in the Service, and manpower is obviously the major item in the budgetary cost of operating one of Her Majesty's ships.

This decision, therefore, taken with those which I have mentioned, could hardly amount to one-third let alone a half of the cut in expenditure which has been indicated. For the rest, we are so far in the dark; and it is noteworthy that when the Prime Minister referred last Wednesday to these cuts he mentioned various items simply as a number of examples".—[OFFICIAL REPORT, 22nd November, 1967; Vol. 754, c. 1341.] The only other thing which has emerged is the indication that there is to be a reduction in expenditure right across the board, including a further reduction, on top of the severe reduction announced in July, in research and development expenditure. Otherwise, the reduction is so far unspecified. Perhaps, in view of the circumstances in which these decisions were taken, it is as yet not completely thought out. Indeed, the unsubstantiality of some of the details given so far might have led one to regard the cuts, to use the Prime Minister's phrase last week, as "a stage army paraded" by the Secretary of State.

I am not sure if the fact that the Prime Minister was particularly exercised to deny this imputation necessarily counts against it. But there are two important factors on the other side which lead us in the Opposition to regard the prospective cuts as a very serious matter and one to the importance of which we have as yet been given no real clue.

The first is the gravity which the Secretary of State himself clearly attaches to the consequences. He is reported to have said at a Press conference which he gave last Wednesday that as a result of the reduction—I quote from the report in The Guardian— The forces are now to be working to closer margins, involving a risk that would normally be unacceptable.

Hon. Members

Shame.

Mr. Powell

"Involving a risk that would normally be unacceptable." According to the same report, he said that The level at which we could meet our military commitments would be lower, particularly outside Europe, but the country's economic circumstances made the risk worth taking. "Risk", and particularly "risk that would normally be unacceptable", are grave expressions from the mouth of a Secretary of State for Defence; and they are made no less grave by what he said in his television interview when he was referring to these cuts. He said: Fortunately, these cuts are having to be imposed at a time when there is no risk of general war in Europe and very little risk of major operations overseas. It is the year 1968–69 which we are discussing, and I would not have thought that a Secretary of State for Defence was wise, in November, 1967, to talk about "very little risk of major operations overseas." Certainly, he will find no comfort or support for that confident prediction in recent history, and the country, I believe, will re-read with a wry expression, in the light of what the right hon. Gentleman said last week, his unwise boast in the concluding words of the Defence White Paper of last July, when he said: The Royal Navy, the Army and the Royal Air Force, though reduced in size, will be capable of meeting all the demands that may be made on them. It is a far cry from "meeting all the demands that may be made upon them" to accepting "a risk that would normally be unacceptable."

Sir Harry Legge-Bourke (Isle of Ely)

Betrayal.

Mr. Powell

Consequently, we are bound to be anxious, when we notice several aspects of the Government's defence policy, where their future intentions are in serious doubt; and we are bound, with the implications of these cuts as yet largely undisclosed, to feel anxiety and to seek for assurances about them.

The first area is Europe. In this financial year 1967–68, as a result of long and difficult negotiations, it was found possible almost to balance the budget of our forces in Europe in terms of overseas currency, by the withdrawal of a brigade in the early months of next year from the Continent. We are bound to wonder whether that balancing operation, which cost 15 months' negotiations for the the financial year 1967–68, can be carried out again or is intended to be carried out again. The Secretary of State has more than once given indications that he is anxious to see means of making much larger reductions than that in the size of our forces on the Continent of Europe.

Incidentally, I believe that we have not yet been told whether he has secured the agreement of our allies in N.A.T.O. to the withdrawal of the brigade early next year. They have been informed of it, but I am not sure we have been told that we have had their agreement.

In view of this uncertainty, and of the vital importance to this country's whole policy in regard to Europe of the future of the British forces on the Continent, we are bound to ask whether there may not be some connection between this intended defence cut in 1968–69 and further withdrawals which may be in the Government's mind. We on this side of the House would be very much happier if we could have a categorical assurance that so far as the right hon. Gentleman is concerned the exercise of 1967–68 will not be surreptitiously repeated under cover of these budgetary changes.

The second factor which fills us with anxiety is the sharp reduction in the manpower of the forces which was announced at the end of July this year in the supplementary White Paper, a reduction which for some of the forces over an eight-year period goes as high as 22 per cent.—the case of the R.A.F.—and a reduction for which no military reason or argumentation was offered, but which was simply derived from a budgetary figure, years ahead, determined upon in advance.

With that experience, of which the consequences and implications are only starting to come home to the Services themselves, let alone to the country, we are bound to ask whether an acceleration of that rundown is not projected in order to bring about part of the intended reduction in the defence budget for 1968–69. I should like to hear the Secretary of State declaring to the House this afternoon that there is no question of an acceleration of the rundown, and especially of the first phase of the rundown which was outlined in the July White Paper.

Finally, the Territorial Army, which has suffered so much at the hands of this Administration, is already anxious as to whether the scale of its operations is not again under review and whether a small saving, to be put in with the rest, is not still being attempted by a further reduction of the rôle and the size of the Territorial Army.

These are anxieties which, until they are banished, are bound to be felt strongly in the light of the Government's announcement last week, and they are more than justified by a survey of the Government's record. This is the Government which came into office to make the Defence Review to end all Defence Reviews. This is the Government which, in February 1966, published its Defence Review and asserted that all the major decisions have now been taken". This is the Government which a year later in the Defence Review of February 1967 foreshadowed further major decisions on the size and equipment of the forces, which were thus thrown into melting pot again. This is the Government which five months after that, in July 1967, came forward with large reductions in all the Services and substantial retrenchments in the dispositions we make for the fulfilment of our commitments.

Two Defence Reviews already this year, and we are now learning in bits and dabs about the third Defence Review. The right hon. Gentleman is challenging the record of his right hon. Friend the Chancellor of the Exchequer and showing that he, too, can produce three defence budgets in the same year—a budget this time of largely unspecified further reductions.

Looking back upon this history, what a triumph for the principle of long-term planning! If anyone wants to judge the fundamental outlook of the Government and the Labour Party towards the future of the Services and towards defence policy, there is one simple but striking fact he ought to consider. In the heat of the devaluation crisis, the Prime Minister, followed by the Chancellor of the Exchequer, announced cuts in Government expenditure. He announced a cut of £100 million in defence expenditure and a cut of £100 million in civil expenditure, including the capital expenditure of the nationalised industries. But civil expenditure and the capital expenditure of the nationalised industries amount to between four and five times the defence budget. Consequently, the same reduction imposed on both represents a cut in defence expenditure four or five times as severe as that which is thought right in respect of the whole of the rest of the range of Government expenditure.

That is deeply characteristic of the Labour Party and the Government. It is their first instinct in times of crisis and difficulty to cut first at the Services and to cut first at defence. That is why this afternoon they are called upon—if they can—to make specific statements which will show what is and what is not involved in the defence cuts and to attempt to bear out the claim that these cuts, imposed upon those of July, imposed upon those of February, imposed upon those of 1966, will still leave the forces of this country capable of meeting all the demands that may be made upon them".

4.16 p.m.

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

May I, first, welcome the opportunity to report to the House in more detail than the Prime Minister was able to do last week on the £100 million cut in next year's defence budget and the implications of the cut for the forces and national security. Also, may I thank the Opposition for making this possible by taking the Continuation Orders formally.

I welcome the right hon. Member for Harrogate (Mr. Ramsden) back into the doomed fraternity of defence spokesmen and I should also like to thank the right hon. Member for Wolverhampton, South-West (Mr. Powell) for a speech of exceptional moderation as far as I have come to recognise his way of speaking.

I cannot help wondering whether one reason for the right hon. Member's moderation was his evident inability to decide whether to attack us for not making cuts at all, or to attack us for making cuts so enormous that they would jeopardise the whole future security of the country. Certainly, when he interpreted the statement made last week by the Chancellor of the Exchequer I could not help remembering that he was at one time a very distinguished textual critic of Greek literature, and I felt that he was following the old adage, "When in doubt, always take the most difficult interpretation of any disputed text."

I should like, first, to report on progress in carrying out the decisions of the July Defence Review which established the long-term defence policy and the size and shape of the forces to fit it. First of all, in the Far East the reception of our policy decisions in Malaysia and Singapore, the only countries we had a specific obligation to consult, has been highly encouraging in every respect. The Tunku of Malaysia announced that he was quite satisfied with our proposals, both in the shorter term, to run down to an air-naval force in 1970–71, and also in the longer term after the liquidation of our bases in Singapore-Malaysia in the mid-1970s. Discussions on the phasing of the rundown and on economic aid to meet its consequences are going smoothly.

It is important—and we should welcome to it on both sides of the House—that confidence in the ability of these countries to meet the severe economic impact of the rundown has been displayed not only at Government levels but, what is even more important, by investors and traders in both the countries concerned. I hope that the House will also note the flat denial by the Malaysian High Commissioner in London of a newspaper report that the Malaysian Government think that Britain has an obligation to stay in Malaysia until the Vietnam [...] is over. A report to this effect in a British newspaper has been described by the High Commissioner as "totally unfounded" and "a figment of the imagination".

Since we last debated defence in July we have been going through a very worrying time in Hong Kong, although I believe that the worst of the current crisis is over. I thought that the House would like to take this opportunity to pay its tribute to the manner in which Britain's military forces, about 10,000 in all, including the Gurkhas, have acquitted themselves. Their presence and resolute behaviour in aid of the civil power has helped in no small way to sustain the morale of the people of Hong Kong. Along the border they have maintained their high standard of steadfastness and discipline in extremely difficult circumstances, and Army experts have assisted the Hong Kong police—for whose per formance no praise could be too high—in the dangerous task of neutralising large numbers of bombs and booby traps in the Colony.

Let me say just a word or two on the situation in Aden. As the House knows, the situation in South Arabia has seen very dramatic changes during the last four months—changes on which the Foreign Secretary has already reported to the House. The military withdrawal will be completed by midnight on Wednesday of this week, and the House will not be surprised to know that in the Ministry of Defence we are crossing our fingers against any last-minute deterioration in the situation. But the fact that the withdrawal has so far been carried out so smoothly, with so little bloodshed and loss of life, is a great tribute to the outstanding devotion to duty and the self-restraint shown by our forces in the most trying circumstances.

The House may wish to hear of a message sent by myself in the name of the Defence Council and the Service Boards to the Commander-in-Chief, Middle East. I said: The Defence Council and the Navy, Army and Air Force Boards pay tribute to the courage, discipline and patience displayed by all ranks of the Armed Forces, and their civilian colleagues, who have served in Aden and South Arabia. They have fulfilled an arduous duty with great distinction, and have deserved the respect of their comrades and the gratitude of the nation. Whatever difference of viewpoint may arise in our debate today, I believe that all hon. Members would wish to support this well-deserved tribute without reserve.

I have reported these events, not only because I believe that the House has a right to hear me report on them, but also because sometimes in the heat of party debate we forget the realities behind the debating points.

The last three years have been years of retrenchment and disengagement for our forces—particularly outside Europe. Disengagement is always a most difficult and dangerous process—full of political and military hazards. Yet, despite major cuts in defence expenditure, which have already brought savings of over £750 million to the taxpayer, our forces have been able to bring confrontation to a successful conclusion with a loss of life, tragic though it was, tiny compared with the benefits brought to the people of South-East Asia.

The total number of civilians and military killed on the Commonwealth side—British, Gurkha, Malaysian and from Singapore—is only 150, and when the House thinks of the tragedy that could have fallen on a whole corner of a continent if we had not been able to hold the situation and bring it to a successful termination it will appreciate that in the history books it will be recorded as one of the most efficient uses of military force in the history of the world.

Whatever our views on the political aspects of the problem, our forces now leaving South Arabia have carried out a major revision of our military posture in the Middle East with outstanding efficiency. In addition, during the last three years, the Services have successfully dealt with a whole series of unforeseen minor problems from Hong Kong, Mauritius and Beira to the Falkland Islands. At the same time, we have produced in continental Europe an Army well described as The finest Army Britain has ever had in time of peace, and one which is the envy of its Allies. I was glad to see that right the right hon. Member for Wolverhampton, South-West publicly endorsed that statement at the Conservative Party conference.

Also, our Territorial Army reorganisation is giving our Army the best reserve Forces in our history. If hon. Members dispute that statement, I ask them to read the account by The Times defence correspondent on 2nd October this year when, reporting on Exercise Rob Roy, he stated that the performance of five hundred miners, clerks, lorry drivers and steel workers from the north of England … part-time soldiers of the 4th Volunteer Battalion, Parachute Regiment—has convinced senior officers here"— that is, in Germany— 'that the reorganisation of the Territorial Army is producing an effective first-line reserve, parts of which could be operational in Europe within 72 hours of a callout. There is no question whatever, as I think many hon. Members opposite—I know that many of them have the interests of the Territorial Army at heart—will recognise, that the new Territorial Army Reserve which is employed for this purpose is the best-trained and best-equipped Reserve we have ever had in peacetime in this country.

We have succeeded in maintaining Army Forces of this unparalleled efficiency despite heavy cuts in the defence budget because in making those cuts we have always been guided by two basic principles. The first principle is that the run-down must be carried out in an orderly way, capability reducing only with commitments, and there must be the most careful consultation with our allies at every point. The second principle is that there must be a ruthless pursuit of value for money on forces and equipment, and we must be ready to forgo the least essential forces and equipment, however politically difficult—and the House will remember how difficult politically the Territorial Army reorganisation was and, indeed, the cancellation of the CVA01—so that the forces may have what they need most. I would not remain Secretary of State for Defence for one moment if I did not feel able to maintain these principles in carrying out the painful duty of retrenchment which has fallen on me so often—indeed, too often, from my point of view.

These principles have also guided me in making the £100 million cut in the defence budget planned for next year no less than in the earlier reductions in our long-term problem which I was given more time to make.

Mr. Frank Allaun (Salford, East)

The Minister has just said "despite heavy cuts" that have been made, but the fact is that our arms expenditure has gone up by £100 million a year—at exactly the same rate as under the party opposite. When are we to see these cuts? When is the £1,100 million expenditure on American military aircraft to cease?

Mr. Healey

With respect to my hon. Friend, I will cover that point very fully later, and, in doing so, will refer fully to his interjection.

Mr. Victor Goodhew (St. Albans)

The Secretary of State has said that he was governed by the need to align the commitments that the forces have to undertake with the actual strength of the forces. Can he tell us now, what he has not told us before, what reductions in our commitments and obligations in the Far East will be made when the rundown takes place?

Mr. Healey

I dealt with this matter in great detail in the July debate, and pointed out something that hon. Members opposite do not seem to be aware of, but which is confirmed by the noble Lord, Lord Selkirk, in the report of a study group he conducted for the Conservative Party.

We are reducing our force declarations to S.E.A.T.O. This does not affect our political commitment, which is simply a commitment to consult, but there will be a great difference in our defence commitments to S.E.A.T.O. as the rundown proceeds. We have also been in consultation with our Malaysia and Singapore allies about a change in the contribution we had undertaken to make in the case of being called on to fulfil our obligations under the Malaysia Defence Treaty.

As I have just explained, these changes in our obligations have been found perfectly satisfactory by the Governments of the countries concerned. We debated this question in detail in July. All these points were made by me then and, as I say, have since been largely confirmed by the noble Lord, Lord Selkirk.

Mr. Gordon Campbell (Moray and Nairn)

rose—

Mr. Healey

No. I really must get one, because I have to deal with some very complicated economic questions which the right hon. Gentleman the Member for Wolverhampton, South-West asked me, and which I want to cover before I sit down.

Sir Ian Orr-Ewing (Hendon, North)

rose—

Mr. Healey

With respect, I have just given way twice, and I must now get on with my speech.

I want now to deal in detail with the £100 million cut in next year's defence budget and, in doing so, attempt to answer some of the right hon. Gentleman's questions, correct some of his misunderstandings, and allay some of his anxieties. First, a word on the rôle and purpose of this £100 million cut. This cut represents a quarter of the total cut of £400 million in public expenditure already announced for the coming financial year. It would be meaningless unless the other £300 million of cuts was also carried out.

The purpose of these cuts is to reduce domestic demand and so to encourage new resources of men and materials to switch to the exporting industry. The Chancellor made it clear a week ago that he is particularly concerned to produce the maximum effect in the next six to 18 months when it will be critically important that the pattern of our national effort should shift towards exports so that new opportunities in foreign markets created by devaluation may be fully exploited.

As the right hon. Gentleman has reminded us, the Chancellor described in detail in this House a week ago the approach the Government would take to defence cuts. Since some observers failed to notice it, and others evidently misunderstood his meaning, I quote again in full what he said: As regards defence, we are satisfied that the reduction of £100 mililon in the Budget planned for next year can be made within the framework of the defence policies announced last summer. The cuts will involve the cancellation of certain programmes, a reduction in research and development expenditure, certain building cuts and a reduction in stocks, although there will be some offsetting transitional expenditure and an increase in sterling terms in the cost of purchases overseas and the pay of our troops."—[OFFICIAL REPORT, 20th November, 1967; Vol. 754, c. 937–8.] I shall not be dealing in detail in my speech with the increase in cost of purchases overseas and the pay of our troops, but my hon. Friend the Minister of Defence for Administration will be doing so.

Mr. Powell

Do we take it that there will be a firm and detailed statement made by the right hon. Gentleman's colleague?

Mr. Healey

My hon. Friend will make a firm and detailed comment on this matter.

I want to take the statement of the Chancellor phrase by phrase, because evidently it has been ignored or misunderstood by many hon. Members on either side of the House. First, it is a cut in the budget planned for next year. We cannot cut this year's budget because it has only four months to run and all the money has been either spent or is already committed. We cannot cut next year's actual Budget. We can only cut the budget planned for next year because the framing of next year's budget is not yet complete. Right hon. Members on either side of the House who have been Ministers will know that the Estimates are not completed until January or February. But we have a good idea of what the shape of next year's budget and its size are likely to be without these cuts because there is a very big bulge in equipment expenditure for next year.

Therefore, the budget was likely to be bumping the £2,000 million ceiling at 1964 prices. This is why I said in Chapter V of the Supplementary Statement in July that we hoped to stay below the £2,000 million a year at 1964 prices in the next two years and to reach £1,900 million a year at constant prices only in 1970–71. If I had felt able in July to tell the House that I proposed to be down to £1,900 million next year, I would have had the greatest pleasure in doing so, but I did not feel able to do so for the reason I have just given.

The cut of £100 million at this stage in next year's planned budget means reaching the 1970–71 target of £1,900 million at 1964 prices two years earlier than was planned only four months ago. It means being £50 million below this year's estimates at even this year's prices, and £1,890 million at 1964 prices.

Mr. Woodrow Wyatt (Bosworth)

Will my right hon. Friend give way?

Mr. Healey

No, I must get on. I give way at regular intervals, but I cannot do so at every paragraph in my speech.

This is on top of enormous cuts in the programme planned by the previous Conservative Government, cuts which would have meant a total saving to the end of the financial year 1968–69 of £1,100 million on the previous Government's plans and there will now be a total saving by the end of the next financial year of £1,200 million on the previous Government's plans.

Look at next year's budget. If we had not made the Defence Review cuts which we have made already, we would be spending on the three cancelled aircraft alone £100 million to £120 million next year and would have nothing to show for it in operational service except, at best, one squadron of TSR2s. There would have been a colossal expenditure of scarce technological resources with nothing to show for it in the Services' kitty, with that one exception. We would have been spending next year nearly £13 million on CVA01 and have nothing to show for it until 1973. We would have been spending £20 million more on the Territorial Army than we are spending and have had reserves much less usable than at present.

I am glad that the right hon. Member for Harrogate has become a Defence spokesman. He will know about this because he formulated the long-term costings before he left office. He was Secretary of State for War and then had responsibility as Mnister of Defence for the Army. He will know that Conservative planned expenditure for the next financial year was £340 million higher than what we planned before the present cuts, and £450 million higher than what ours will now be.

Mr. James Ramsden (Harrogate)

The experience to which the right hon. Gentleman has referred enables me to know the difference between a long-term costing five years in advance and a substantive budget estimate made immediately before and preceding a financial year. This shows the whole fallacy of the right hon. Gentleman's argument.

Mr. Healey

If the right hon. Gentleman, with all his comparatively recent experience as a Conservative Defence Minister, will tell us when he winds up for the Opposition what he would have cut to bring down the budget without touching any of the things we have cut and which he has voted against, we will all be very much better off in knowledge than when the debate started.

On top of this reduction in expediture there will be a total reduction in the number of men and women working in and for the forces of 64,000 in the two years ending April, 1969. These reductions are real cuts. I hope that the House will recall that they have brought aircraft workers out into the streets to demonstrate against the Government, have caused the resignation of a Minister and a Chief of Staff and nearly brought about the defeat of the Government in this House. Now I have been asked to add another £100 million—[Interruption.] My hon. Friend the Member for Salford, West (Mr. Orme) was not in the House at the time, but his hon. Friends will tell him that that was so.

Now I am asked to add another £100 million to the cuts I have been describing. These cuts are equally real and are equally painful. The only consolation I have been offered was by the Chancellor saying that I need not take account in making them of certain offsetting expenditure, and, in particular, of new transitional expediture such as cancellation charges, although next year's budget will in any case include cancellation charges totalling £30 million for cuts already made before this new set of cuts. I also need not take into account the increase in sterling terms in the cost of purchases overseas and the pay of our troops.

I shall try to meet the right hon. Gentleman's question and to quantify the size of these offsets later. These offsets will be nothing like as high as some have suggested, particularly in the newspapers. I do not need to tell the House that a cut of £100 million in next year's estimates at this stage in the game, on top of the cuts already made, is a very tall order and a very unwelcome charge to be put on me, especially since I have been determined to maintain the principles of orderly reduction and value for money by fixing priorities in relation to likely tasks.

I believe, and the whole Government share my view, that we must, above all, keep faith with our forces and with our allies in making these cuts. We can have no reversal of the July decisions, which revised Britain's overseas policy over the next decade and fixed in broad terms the rôle, shape and size of the forces required to support it. That is why my right hon. Friend the Chancellor said last Monday that the reductions must be made within the frame work of the defence policies announced last summer. Let me tell the right hon. Gentleman that these cuts mean no acceleration in the rundown or in the redeployment of our forces.

Mr. Frank Hooky (Sheffield, Heeley)

Does not this mean that there is an irrevocable commitment for the next 10 years as regard our position in the Persian Gulf?

Mr. Healey

No, of course it does not. We shall adjust our policy from time to time as events develop. We explained the approach we take to the problems of the Persian Gulf in the debate in July. I recommend my hon. Friend to read some very interesting articles published by the defence correspondent of The Times on the Gulf recently, which I would not endorse in every respect, but which give some idea of the offset in economic benefits to Britain for the very small additional defence costs involved in keeping troops there at the present time.

Mr. Douglas Dodds-Parker (Cheltenham)

rose—

Mr. Healey

No; I must get on. I seem to be giving way every minute or two.

I do not think that some hon. Members recognise that there is very little economic advantage, in the areas where the Chancellor wishes to get advantages, in speeding redeployment when the paramount objective in this case is to reduce the demand on resources in the next six to 18 months. We are already having to undertake a very big building programme in the United Kingdom to house the 30,000 men, many of them with families, who are coming home in the two years ending in April, 1969. If we are to increase that number, we shall have to build new houses and barracks for nearly all of them.

The economic facts are these. To save £100 on the budget in the Far East, we have to spend £500 in the United Kingdom, and in the Far East we would have to replace some of the reduction in Singapore and Malaysian earnings by increased economic aid. To save £100 in Germany we would have to spend £2,000 in the United Kingdom, because the incremental cost of keeping forces in Germany in resources is very much smaller than the incremental cost of keeping them in the Far East. The fact is that the needs of our economy at present, of our diplomacy and, above all, so far as I am concerned, of the morale of our forces, all point in the same direction. If we want to make big savings of resources quickly, we must make them on hardware.

That is why the Chancellor said that the cuts will involve the cancellation of certain programmes, a reduction in research and development expenditure, certain building cuts, and a reduction in stocks."—[OFFICIAL REPORT, 20th November, 1967; Vol. 754, c. 937.] I cannot, until the Estimates are completed, give full and precise details of all the cuts. The important thing is that, with the reservation the Chancellor of the Exchequer stated, next year's Estimates will represent a £1,890 million defence budget at 1964 prices. However, I will try to identify and quantify the main areas of saving and the major decisions now.

Mr. Wyatt

I am trying to follow with great care all the sums my right hon. Friend is mentioning. One figure I have not heard him mention is how much devaluation has added to the cost both at home and abroad before he starts his notional reductions at 1964 prices. We now have to talk in terms of 1968 prices with devaluation.

Mr. Healey

I have already said that I shall deal in detail with that question later in my speech. If some hon. Members show just a little more patience I shall be able to conclude my speech faster than would otherwise be the case.

Next year will still be a bumper year for delivery of equipment to the Services, because an almost unprecedented amount of new hardware will be coming into operational service in any case. For example, the Navy will be getting two Leander frigates, a new Patrol submarine, a new Polaris submarine, five support ships, and scores of marine service craft and fleet auxiliaries. The Fleet Air Arm will be getting new Buccaneers, its first Phantoms, as well as some helicopters, hundreds of new guided weapons, and torpedoes. The Army will be getting an enormous quantity of small arms, large deliveries of Swingfire, the new long-range anti-tank weapon, hundreds of new track vehicles, including the biggest annual delivery of Chieftains so far, and over 1,000 wheeled vehicles. The R.A.F. will be getting over half of its Phantoms; it will be completing delivery of its Hercules and getting two more VC 10s and hundreds of guided weapons.

Against that background, a background of delivery far greater than would have been secured under the previous Government's plans, because so much of their budget next year would have been in terms of R and D, the cuts and deferments we have to make, although painful, cannot remotely be regarded as disastrous.

The cuts will fall into three main groups. About £10 million of the total £100 million odd will flow from unexpected delays in the development of equipment. [Laughter.] Before right hon. Members snigger at that, they might listen to precisely how these delays have come about. First, the planned development which was expected of a new combat aircraft to replace the cancelled AFVG will slip because the German Government are unlikely to take a decision on this before Easter. Secondly, difficulties in the development of the Ferranti nav/attack system and the Rolls Royce Spey for Phantom will delay first deliveries of the Phantom. The bulk of the saving—90 per cent.—is in two large blocks.

Mr. Powell

Have these delays arisen since 17th November, or were they not delays which were foreseeable before and which were to be taken into account anyhow in the drawing up of next year's budget?

Mr. Healey

If I had not been under this additional financial stringency, as the right hon. Gentleman, who served in the Ministry of Defence, will know, any savings I made through unforeseen delays in one area I would have taken advantage of by additional expenditure in others. [Interruption.] Obviously so. If I am working within a fixed budget, I want to make the best possible use of the money that is available.

The bulk of the saving, something over £90 million, will come in two large blocks. A little over £60 million will be saved by a very large number of minor cuts and deferments which we have decided to make after a detailed scrutiny of next year's Estimates. Although they will represent only about 5 per cent. of the total bill for equipment, building and stocks, they will marginally and temporarily reduce the period for which we could sustain a major non-nuclear war against intensive sophisticated opposition. This is a risk, but, as I will explain later, a risk which I think we are justified in taking in these circumstances.

On top of that, a small number of major projects will be cut out of the programme altogether. I cannot give full and precise details of the savings on every specific item, because we have had only a week to do all the work on this, but I will do my best. I will give the broad orders of saving.

First, as to the Royal Navy, we shall phase out H.M.S. "Victorious" now. We said in July that she was due to phase out in 1969, anyway; so, in fact, she will be phasing out 18 months early. It is ludicrous to claim, as I notice that one writer did yesterday, that this destroys the whole of our defence policy in the Far East in 1970. She would not have been there in 1970, anyway. Nor, in fact, does cancelling the CVA01 affect our policy in 1970. She would not have been available until 1973, anyway. In fact, the fire on "Victorious" meant that she could not have been available before Easter, so we are losing only a little more than 12th months' availability.

I could not have made this change, and would not be recommending it, if we were still committed to keep a maritime force off Aden for six months or more next year. I believe that we can just manage without "Victorious" in the new situation. We do get one benefit from it, in that over 2,000 men will be available to replace shortages in other ships, particularly engine room artificers, and to relieve stretch throughout the Navy. I have decided that "Victorious" should be disposed of for scrap as soon as possible after she has been paid off. This would have had to have happened in 1969, if it did not happen now. There is no other naval use to which she could economically be put.

Sir Ian Orr-Ewing

Since "Ark Royal" is having a long refit and since we therefore have only "Eagle" and "Hermes", which are much smaller—and accidents can occur—is it not a very unwise policy for the Government to destroy "Victorious", which could be brought to reserve during the next year? Could not "Victorious" be put into operational reserve rather than be destroyed?

Mr. Healey

With respect, I do not think that that would make sense, because if we were to put "Victorious" into reserve, and ready to fill a gap that might arise, we would have to spend a good deal of money, up to £1½ million, within a four months' period to complete the existing refit and repair the fire damage. I do not believe it would be worth doing so to meet this contingency. [Interruption.] We will save a great deal of money by phasing it out.

Several Hon. Members

rose—

Mr. Healey

I urge hon. Members to have patience. I will be covering most of the points they have in mind.

I do not wish to underestimate the effect on the Royal Navy of this decision or of the reduction in the Buccaneers; but I have been anxious to select economies which will not impinge directly on the long-term shape of the future Fleet announced in the July White Paper, or on our plans for the modernisation of the two largest aircraft carriers, the "Eagle" and the "Ark Royal", on which we will be relying until the middle 1970s.

F.A.A. aircrew from "Victorious" will join these carriers earlier than originally intended. We shall still have never less than one carrier operationally available till 1975—and often two. [Interruption.] Hon. Members who raise other points during the debate will, I have no doubt, have their questions answered later by my hon. Friend. Apart from the immediate saving in completing the refit and repairing the fire damage—which will be as high as £½ million—we will save £4 million next year on the phasing out of "Victorious".

I come to the Buccaneers. Partly as a result—but not wholly as a result—of phasing out "Victorious", I believe that we can cancel the last eight Buccaneers which were due to be delivered to the Royal Navy. They were intended for backing, anyway, and they would have been handed over in 1976 with a larger number of Buccaneers to the R.A.F. when the carrier is finally phased out. This will still save about £6 million next year and the Ministry of Technology is negotiating with the firms concerned about cancellation charges and is trying to meet the problems of work-load which the cancellation has created.

In dealing with the Army, I wish to make it clear that Army equipment is, by and large, much more varied and cheaper than that for the Navy or R.A.F. Therefore, the cuts here must be spread over a larger number of items.

Mote than £5 million will be saved next year by slowing down the production of certain items and by deferring delivery. The most important items affected are the Chieftains, Swingfire, the M2(B) bridge for flu. Chieftain and C Vehicles. All of these are primarily relevant to a large-scale war in Germany.

In addition, the Army will suffer from the cancellation of the order for 15 Chinook heavy lift helicopters from the United States. This cancellation is, I know, deeply disappointing to the R.A.F. as well, since the R.A.F. would have flown them. However, these helicopters were designed to provide a capability which we have been able to do without until now. We will, therefore, have to do without it for a little longer, remembering that this cancellation will save about £6 million next year and a further sum in the following years. [An HON. MEMBER "About £5 million or £6 million?"] The Chieftain and other decisions will save about £5 million, and the Chinook cancellation about £6 million.

We have decided not to proceed with the staging post at Aldabra. The Government had decided their view in this matter, subject to agreement by the United States Government to join us in the project. However, the United States Government had not taken that decision, although it was expected to do so in the next week or two. Aldabra would have been a valuable addition to our strategic flexibility, but this addition is something which the Services must now forgo. I dare say that other sections of the community may see some benefit in this decision.

This staging post would have been primarily relevant to access for our forces to and from the Persian Gulf if it were impossible to overfly either Arab countries or our CENTO allies. For the southabout route, the flight over Aldabra to Singapore would have been only marginally cheaper than the westabout route, over Canada and the United States. The cost of Aldabra next year would have been about £4 million, but a great deal more in later years. Thus, there will be much bigger savings later from this cancellation.

On the research and development side, we will still be spending well over £200 million next year, but we are cutting about £8 million off that bill. The biggest item in these cuts, some of my hon. Friends will be glad to know, is a cut of over £2 million on the development of nuclear weapons. [HON. MEMBERS: "Is that all?"] We will, therefore, be spending little on this aspect; and if any of my hon. Friends consider that we should spend more, I trust that they will let me know. We also hope to make some savings by not fully replacing the wastage of civilians in some defence establishments.

This section of the cuts will save about £34 million next year, and that is the best I can do at this stage in quantifying the cuts. I may prove to be a little out here or there, but I guarantee that next year's estimates will be on the new target.

Mr. Simon Wingfield Digby (Dorset, West)

Will these cuts include the Royal dockyards?

Mr. Healey

I cannot say at this stage. That matter is being looked into. We are having consultations with the Whitley Council and with the unions concerned about this matter.

I was rightly asked to say something about the effects of these cuts and I know that the House is concerned to have this information. The effect of these cuts on the capability of the Services is that the Services will be operating on narrower margins over large areas of equipment and stocks. The level at which we can meet some of our commitments will be fractionally reduced. The Army cuts affect almost exclusively our capacity for large-scale war in Germany, but I do not believe that we are likely to have a large-scale war in Germany during the period in which the cuts will be effective.

Apart from the phase out of "Victorious," the Navy and Air Force cuts will affect our capacity for prolonged conventional war outside Europe at a high level of intensity against sophisticated enemies. I do not think that we are likely to be involved in such a war in the next two years—nor do any of our allies in the area.

Mr. Christopher Mayhew (Woolwich, East)

Can we get something quite clear? Even with the phasing out, will we be able to keep at least one carrier east of Suez all the time until the mid-70s?

Mr. Healey

Yes, Sir. We should be able to do so, if we wanted to do so—but we may well decide that we do not want to do so. As I have made clear, we will always have one carrier for operations anywhere in the world. We will often have two available; but my hon. Friend will not expect me to give him a list of the months in which there will be two carriers available and when only one will be available.

I frankly admit that there is an element of risk here, an element of risk which I would be reluctant to take in normal circumstances. As I said last week, the circumstances are not normal and I believe that the degree of risk is one which, in the current situation, is acceptable. Hon. Members must accept that any defence budget involves judging what risks are acceptable and which are not. If we tried to cover every contingency we would have a defence budget of about £200,000 million and not £2,000 million a year. At least we can claim that we have not misjudged the situation in this respect in the last three years. Our ability to carry out the tasks which have fallen to us, many of them unforeseen, is proof of that.

These cuts also mean that many of our units in all three Services will be disappointed not to receive equipment in the next 12 months on which they were counting. It is a disappointment which I share—but it will be paralleled by disappointment for millions of people who do not wear uniform. Indeed, the defence cuts must be matched by cuts of comparable severity in our civil spending, or they will fail in their purpose and devaluation itself will have been in vain.

I hope that hon. Members will now at least agree that these cuts are new, are real and are painful. My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot), who asked questions about this last week, would have no doubt about the reality of the cuts if he were still representing Devonport. If he still doubts their reality and pain, let him consult the hon. Member for Portsmouth, West (Mr. Judd) and the hon. Member for Kingston-upon-Hull, West (Mr. James Johnson).

Mr. Stan Newens (Epping)

Is my right hon. Friend aware that there are many hon. Members on this side of the House who still regard these cuts as grossly inadequate?

Mr. Healey

I am well aware of that. I often feel, as Secretary of State for Defence, that making defence cuts, so far as some of my hon. Friends are concerned, is rather like throwing herrings to a sea lion. It gulps them down and a second later is back asking for more. But I will try to explain some of the aspects of these cuts to correct some of the mistaken impressions from which at the moment I think they are suffering.

The first question raised, oddly enough, both by my hon. Friend the Member for Salford, West and the right hon. Gentleman the Member for Wolverhampton, South-West—is: is a cut in a rising programme a cut at all? This is a question of semantics. If one says that a cut in a rising programme is not a cut, that is fine; but in that case one must take the same line on cuts in civil programmes. We cannot have a double standard here. We must use the same words for a cut in civil and defence programmes. If hon. Members really believe that a cut in a rising programme is not a real cut, what was all the fuss about in July, 1966?

Some of my hon. Friends, who complain bitterly that defence cuts are not really cuts at all, are always attacking the Government for cutting civil programmes; but civil programmes, in spite of all the cuts, have risen 20 per cent. in real terms, or £2,000 million, since 1964, which is the equivalent of a whole year's defence budget. In fact, defence is the only Government programme which has actually fallen in real terms since the Government first came into office in October, 1964.

If we take the view that a cut is a cut only if it is a reduction compared with the current year, I ask my hon. Friend the Member for Salford, West: what was the row about in 1961 when the right hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd) imposed the most savage cuts on our civil programmes known since the war, because, after the cuts, the civil supply vote went up £350 million, or 10 per cent.? Like the defence cuts, they were cuts in a rising programme. The difference is that I have had to be much more savage in dealing with the defence programme than the right hon. and learned Gentleman the Member for Wirral was in dealing with civil programmes in 1961. As a result, I shall have cut £1,200 million off Conservative defence programmes in four years of Estimates since I took this job.

Mr. J. J. Mendelson (Penistone)

I am sure that my right hon. Friend would not want to be out of line with the Chancellor. The Chancellor insisted throughout last week and the last three months that because there is a rising programme in expenditure for the social services, it is wrong and heretical to talk about cuts. We are applying the same argument to the defence budget. Surely if the Chancellor is right on social services expenditure, he must be right on the defence budget.

Mr. Healey

We cannot have it both ways. If my hon. Friend accepts what the Chancellor says and there are no cuts in social service expenditure, that is fine.

Mr. Mendelson

I do.

Mr. Healey

But my hon. Friend is not in line there with all the speeches made by some of his hon. Friends who sympathise with him on this matter.

In dealing with the next complaint which is often made, all I ask is that hon. Members should apply the same type of judgment, the same words, and the same categories, to defence spending as to civil spending.

Mr. Mendelson

I have.

Mr. Healey

If my hon. Friend is saying that he was attacking the right hon. and learned Gentleman the Member for Wirral in 1961 for increasing civil expenditure 10 per cent., he staggers me.

The second question which is often raised, and which was raised, for example, by the correspondent of The Times on Saturday, is: are these cuts really cuts if they are deferring the programme; are they absolute savings?

Even if they were not absolute savings—and they are, as I shall show—that is not relevant. What all public sectors are asked to make now is a temporary sacrifice to meet a temporary problem. We hope to reinstate some of the deferments later. That will have to be judged by the Government of the day in the light of the then economic and international situation. But most deferments mean slipping a whole programme to the right. This means a real saving at any moment one chooses to add up the sums.

Again, do not let us have a double standard here. I hope that the cuts in the investment programmes of the nationalised industries will be made good later on. I hope that my hon. Friends agree with me on this. This will be true also of some of the cuts in the defence budget for next year.

I come now to the major question on which I have had so many interventions: will all these cuts in next year's programme, real and painful as they are, be wiped out by transitional costs or by devaluation? This is a very difficult question on which to give a precise answer. I apologise to the House if at this point my argument inevitably becomes a complex one, but, as hon. Members will know, it is an extremely complicated question. Transitional costs, cancellation charges on the Chinook and Buccaneer, are likely to be a very few million pounds at most. We shall be negotiating with the firms concerned about their precise quantity and the negotiations may not be finished in time for next year's Estimates. However, we do not expect these cancellation charges to amount to more than a very few million pounds.

The increase in cost caused by devaluation is very much more complicated. First, a large part of defence expenditure at home is made on imported food or materials. The same applies to every spending department, and indeed, to all consumer spending.

It is difficult to estimate the effect of devaluation on this without a very lengthy and complicated exercise, but on the work that we have been able to do the impact of devaluation on our domestic defence cuts is likely to be a very few million pounds next year. In other words, this and cancellation charges together will be well under £10 million.

The main problem is the impact of devaluation on foreign exchange spending as defined in Annexe H of the Statement on the Defence Estimates; that is to say, on the cost of equipment bought from abroad or the cost of stationing troops abroad.

There is a very important difference here between the effect of devaluation on the nation's defence budget—that is to say, the direct budgetary cost on defence Votes—and the effect on the national economy, which is the important thing, and, in particular, the net impact of devaluation on the bearing of defence foreign exchange expenditure on the nation's balance of payments. That is what hon. Members are most worried about, and rightly so, in the context of devaluation.

First, the impact on the defence budget. The cost of foreign equipment next year to the defence budget will go up between £15 million and £20 million. What we spend on the increased cost of purchases of food and petrol in countries which have not devalued and increased local overseas allowance is likely to exceed what we gain in increased receipts from sales to other countries by anything from £10 million to £30 million. That is, the defence budgetary effect is likely to be an increase of over £25 million next year but under £50 million.

As I said, my hon. Friend the Minister for Defence Administration will be discussing the local overseas allowance problem at the end of the debate. The important point is that the effect of this devaluation increase of between £25 million and £50 million on the economy as a whole, and on our balance of payments, will be very much less.

First, some of the money paid by the Ministry of Defence to foreign countries is to buy British goods in foreign equipment. For example, the Phantom is 40 per cent. British, and £14 million of the cost of the Phantom shown in the foreign exchange side of the ledger next year will be spent on sterling goods. It will not be a net drain on the balance of payments. There are the Spey engines and the Ferranti nav/ attack. The F111 offset agreement targets are in dollars, both in respect of the direct sales target and the co-operative sales target, so we shall recover all the foreign exchange that we are paying on the F111. On the sales we have already contracted to make to the United States we shall be earning more dollars than we spend on the F111 in the next two years.

Mr. Ronald Atkins (Preston, North)

Will my right hon. Friend give the actual figure for the F111? He has mentioned the offset agreement, but I would prefer to have figures in the hand rather than anticipations in the bush.

Mr. Healey

If my hon. Friend is interested in figures in the hand I cannot give him them without notice. Perhaps he will put down a Question on the matter. Then I will give him both what we expect to earn under the F111 offset agreement next year and what we expect to pay, including the devaluation increase, on that agreement.

Cancelling the Chinook and cutting or deferring other foreign equipment will save us about £10 million on balance of payments next year. Thirdly, half the budgetary increase in stationing costs will be in Germany, and we are firmly determined to cover this by a new offset agreement. Indeed, it is more important than ever that we should do so, given the effects of devaluation. If we do so—and we have done it this year—it will reduce our stationing costs increase because of devaluation by about £12½ million.

So, taking these offsets into account, the devaluation effect on the balance of payments through the increase in equipment and stationing costs is likely to be about £25 million, and that will be partly offset by increased revenue from sales to countries which have not devalued.

When the detail of all these factors has been more fully assessed I shall consider approaching the American Government on the general pattern of the offset negotiations in February, 1966, to see where adjustments may be justified in terms of a benefit to the economy. This is the aim of the £100 million cut. We shall have an offset of about one-third through cancellation charges and increased foreign exchange costs to the £100 million which we shall be saving.

Mr. Wyatt

Can my right hon. Friend say what the effect will be after the increased pay has been given to our soldiers overseas to make up for the otherwise 14.3 per cent. cut in their pay?

Mr. Healey

The increase in the pay of our forces overseas is the major item in the devaluation increase in our stationing costs abroad.

I have dwelt at some length on the foreign exchange effect of devaluation because after three years as Secretary of State I am deeply concerned at the ease with which some people, inside and outside the House, tend to assume that if once we could lift from our shoulders what they call the colossal burden of overseas defence spending all our economic troubles would be at an end. We have been spending a lot on defence overseas; indeed, too much. That is why I have been doing my best to cut this expenditure. That is why I shall have brought 300,000 men home, with their families, from abroad in the two years ending April, 1969. But it is still running at a gross cost of about £300 million a year.

Let us beware here, too, of applying a double standard. While I have been cutting overseas expenditure of the forces the overseas expenditure of the private consumer, of industry and of the civil departments has been rising. At the moment, defence is responsible for only 41 per cent. of our total import bill as compared with 6 per cent. only two years ago. I often wonder why no such attention is paid to those who spend the other 95½ per cent. of our foreign exchange.

Mr. Mendelson

We do pay attention to them.

Mr. Healey

Let me give some figures which should have some impact on those who do not plan to apply a double standard. The Services buy about 15 per cent. of their equipment from abroad. One of our great aircraft corporations has bought 40 per cent. of its equipment overseas during the last 10 years. The Services bill for defence equipment is only 1½ per cent. of our total import bill—less than what the nation spends on imported drink and tobacco, less than we spend on buying pulp and wastepaper from abroad so that the newspapers can fulminate against the extravagant expenditure of our Services, and less than the nation spent last year on imports from the Soviet Union.

But the figure of £300 million to which I have referred is only the gross expenditure. To judge fairly the impact of this defence spending on our balance of pay ments we must take account of various other factors, such as the £100 million a year of defence equipment which we sell abroad. Much of this we would have little chance of selling if we were not contributing to our alliances and did not have this equipment in large numbers in our own forces. We must take account of the £90 million which British firms in 17 cities in the realm have already contracted to earn in the United States under the F111A offset agreement, and also the £300 million that they will earn abroad before the offset agreement [...]pires in 10 years' time.

The so often quoted figure of £300 million of foreign exchange on defence also includes about £200 million on the costs of stationing troops overseas, but about £75 million of that is already covered by offset agreements with Germany, America and Hong Kong. We ourselves earn about £40 million a year from the presence of American and Canadian forces in Britain. There is another important point. The imports into Britain which are saved by the presence of our troops abroad, together with the exports they generate by their presence overseas and the aid they render unnecessary by their presence could, in some circumstances—but by no means all—amount to as much as one-third of the stationing costs in foreign exchange.

This may be true in some underdeveloped countries in the Far East, and perhaps even in the Mediterranean, but it is far less true of our forces on the Continent of Europe, where the offset agreement with Germany, for example, includes goods that we would have exported in any case and our allies have plenty of sterling to spend on British exports whether or not our forces are there.

Our forces overseas have a price in terms of their cost to the economy as well as a value in terms of influence and peace, but those who know the price of everything and the value of nothing should at least make some attempt to calculate the price more realistically. There may be different views on how much can properly be offset against the gross foreign exchange costs. It is very difficult to decide, for example, how much of our overall defence sales can properly be offset against our foreign exchange defence costs, but that a significant sum should be offset any economist will admit.

Rear-Admiral Morgan Giles (Winchester)

Is not the very important point that the right hon. Gentleman has been making a point that he should make in the Cabinet? Should he not stand up for the Department that he represents?

Mr. Healey

I am not permitted, nor would I wish, to discuss any points that I may or may not make in discussions within the Government.

We can argue about how much to offset against the gross exchange costs. We can argue one way or the other, and I do not claim that the maximum to which I have referred is the right figure. But that there is a significant offset I do not think any economist can doubt, and the real argument should centre where it often does with my hon. Friends—on the real problem, and that is not so much the cost of our forces to the economy as the value of our Armed Forces in terms of Britain's influence and world peace. This is an argument in which I am always glad to take part, as my hon. Friends know, whether we always agree with one another or not, and it must always remain to some extent a matter of political judgment and even of temperament.

Mr. Stanley Orme (Salford, West)

We recognise that this is the central theme of the whole argument. Despite what my right hon. Friend said about offset costs, it is the Government's current overseas account which is at the basis of much of our problem. I ask him why it is that France and West Germany, who spend only 3 per cent. less of their G.N.P. on defence than we do, do not have the same problems that we have.

Mr. Healey

One reason why France does not have our problem is a reason which I would not seek to emulate, and it is that France has had a very large number of devaluations since the end of the last war, and the last devaluation was accompanied by a 9 per cent. fall in real wages. I am not suggesting for one moment that we should follow that example, and I should fight tooth and nail to avoid our doing so.

I believe that it is possible to lay far too much stress on one often-marginal element in our account and to ignore other factors which in the long run may be far more important. The question of the value of our military forces is one on which we may disagree, but it is the most important point. During the three years of the Defence Review a British Government have for the first time in our history attempted to balance the cost of our presence in various parts of the world against the political and economic benefits which it brings us in a constantly changing international situation.

I do not pretend that we have done the job perfectly. No doubt as events move forward we shall have to make continued adjustments to our plans. But I believe that it would be a tragedy if we allowed the set-backs which we have suffered in these last few weeks to throw all the careful work of the last three years into confusion at a long-term cost to Britain and the world out of all proportion to what we could hope to save thereby.

Mr. Powell

Could we get the budgetary position clear, following the figures which the right hon. Gentleman has given? I take it from what he said that when the Chancellor of the Exchequer referred to a "reduction of £100 million in the budget plans for next year he meant that the budget planned for next year" has been increased by devaluation by between £35 million and £60 million but that there has been a reduction of £100 million, so that the budget will be between £65 million and £40 million lower than it would otherwise have been but for devaluation and the cuts?

Mr. Healey

That was a rather complicated question which I should like to see in writing before I endorse or deny what the right hon. Gentleman said. What I have made clear is that in terms of benefit to the economy the offsets through cancellation charges and devaluation—offsets which the Chancellor of the Exchequer declared himself ready to accept last week—will amount to about one-third of the total saving. That is the important factor which the House and country should keep in mind.

Mr. R. T. Paget (Northampton)

There is one cut to which we were pledged and which would be welcomed by our allies—that of our independent nuclear deterrent, which we were pledged to abolish. There is the agreement which we were pledged to renegotiate and the Polaris deal which we were pledged to cancel. Why has not my right hon. Friend taken the opportunity to make that cut?

Mr. Healey

One very important reason is that my hon. and learned Friend is wrong in one of the basic assumptions of his intervention. I have not met any representative of our allies—except one—who would wish France to be the only country on this side of the Atlantic possessing nuclear weapons. That is a very important factor to be borne in mind at present.

I would only hope that on one issue we can all find common ground—on both sides of the House, above and below each Gangway. After the shifts of defence policy which successive Governments of both parties have rightly or wrongly imposed on our Forces in the last 20 years, the forces need, above all—and I quote words which I used in July—a period of stability in which they can plan manpower and careers and adapt their equipment, training and support programmes to changes in their size and shape.

I would ask both sides of the House to remember that although political, strategic, economic and technological factors govern the rôle, the size and the shape of the forces, at the end of the day we are talking about the future livelihood, happiness and welfare of about 340,000 Service men and women and their dependants and of the civilians who work with them. I need hardly emphasise the hazards, the hardships and the heartaches which are in greater or lesser degree inseparable from a Service career—actual physical danger, constant movement, separation and the rest of it.

Service men and women are usually the last to complain on this account. They are content to rest upon their pride in the professional skill, the discipline, the vigour and the resilience of their calling. That is all the more reason to provide them with the basic reassurance to which they are entitled regarding their futures, and to express our confidence that they will continue in the future to fulfil rôles no less essential, though changed, to the nation than in the past—and to provide them with the means to carry them out. On this, I hope, we can all be united.

5.28 p.m.

Lieut.-Commander S. L. C. Maydon (Wells)

I want to ask the right hon. Gentleman three questions which arise from what he said in the early passages of his speech. He referred once if not twice or more to our capability to sustain full-scale conventional war in Europe. Surely he must realise by now that the purpose of all our Armed Forces is to prevent such a thing from ever happening, and that all the cheeseparing here and there does nothing towards that end. That is why I am so thoroughly critical of what he and his party are doing to the Services. The rôle of the Services today is not to fight a war, but to prevent war from ever breaking out.

I come to the next question which I put to him. He said that it was £100 million before the offsets. If I may say so, when he began embarking on the offsets his speech became more and more obscure and I found it exceedingly difficult to follow which was on one side of the balance sheet and which on the other. We require much more clarification on that point.

But before he embarked on those obscurities, the right hon. Gentleman mentioned that the £100 million represented one-quarter of the cuts in Government spending. Service cuts are one as to three of civil cuts. During the obscure passage about the offsets, the right hon. Gentleman made one remark which I took to be clear—the total offsets he estimated to be roughly one-third of the £100 million. Thus, at the end of the day we are left with a saving not of £100 million but of £66⅔, million.

Am I correct in that assumption? If that is correct, it represents 3⅓ per cent. of the £2,000 million estimates for the coming year. How does this compare with the savings in the total of the civil estimates? I contend that the Services are carrying a much greater economic "crunch" than all the other Government spending put together. I would like this clarified in the reply tonight.

Finally, I hope that the right hon. Gentleman will think again about H.M.S. "Victorious". We have seen what one fire can do. We know what collisions can do and all the possibilities there are today for sabotage. God forbid that that should happen, but if we are to live until the mid-1970s with only two full-scale aircraft carriers to do these jobs, we shall be in trouble sooner or later if we encounter one of these accidents.

The right hon. Gentleman said that a few million £s would cover the cancellation charges for the aircraft and other pieces of equipment. He also said that it would only cost £500,000 to refit the "Victorious" and put her into the active reserve—into mothballs. He should think seriously again before deciding to scrap her.

Sir Ian Orr-Ewing

Perhaps I can strengthen my hon. and gallant Friend's argument by pointing out that "Hermes", being a small carrier, can never operate the Phantom and therefore we are even more vulnerable, since we shall have only the "Eagle" fully operational with the Phantom and later the "Ark Royal", when refitted—and refittings are often delayed.

Lieut.-Commander Maydon

We see once against the famous Labour Party pattern. It gets into financial difficulty and the first thing to be sacrificed is the nation's safety and the security of its citizens upon their lawful occasions throughout the world. We have long since ceased to be able to police the world for other people—all of us acknowledge that. But some of us acknowledge it with regret because when we were able to do this job I believe that the world was a better and safer place than it is today.

Now we are quite incapable of protecting our own interests. We lack the resolve and the equipment to do so. The Prime Minister could very well argue that he has been so successful in dissipating confidence in Britain that no one will rely on us and so we need shoulder no responsibility in the future.

Our allies cease to be our friends and our friends no longer value us as allies. The Prime Minister has talked many times of other people "selling Britain short". He is the man who has got this country into such a diminished and discredited position in the world that Britain will not sell at all today. One of Europe's main problems is folie de grandeur not only in the Champs Elyseéds but in Downing Street.

Before the Middle East war and the serious troubles over Cyprus, N.A.T.O. was going through a very testing time. First, there was the disaffection of President de Gaulle; secondly, the Americans, quite naturally, were intensely preoccupied with Vietnam and other matters on the other side of the world; thirdly, and by no means least, there was our weakness in resolve and in Armed Forces. We know that the men are strong and in good heart. We can see what they can do. But the equipment, except for those pieces now coming forward as a result of the measures put through by the Conservative Government during their last years of office, is poor.

Mr. Healey

indicated dissent.

Lieut.-Commander Maydon

Can the Secretary of State put his finger on one important piece of military equipment that our forces are using today and for which this Administration alone are responsible?

Mr. Healey

Yes. One is the big increase in the number of helicopters of many types available to the forces. This is a very much bigger increase than was planned by the Conservative Government and has rectified one of the most serious deficiencies from which our forces suffered under the previous Government both in the Far East and in the Middle East, as I had the opportunity to see for myself when I visited those theatres before the General Election of 1964.

Lieut.-Commander Maydon

The right hon. Gentleman has not answered the question. Helicopters in many forms were in use, as he knows. We all acknowledge that there were not enough of them. But as he well knows, at that time our military leaders and military leaders in other countries were not entirely convinced of the usefulness and complete reliability of helicopters, which the modern machines of today are able to display. His argument that the present Government have been responsible for better equipment in helicopters has no merit.

Mr. Healey

If the hon. Gentleman does not like that one, then I had better give him another. The capacity of our medium-range transport fleet has been increased several times already by the introduction of the Hercules aircraft. Under the plans of the previous Government, we would have had no replacements for our medium range transport for at least another three years and then we could only have afforded one replacement for every three replacements we can afford at the present time.

Lieut.-Commander Maydon

I give the right hon. Gentleman one-third marks for that increased capacity, but he knows that the more modern machine we planned would have gone forward into the next decade as a reliable aircraft. He has gone out of his way to buy a semi-obsolescent machine rather than go the whole way and buy something which would be useful for many more years. [HON. MEMBERS: "And built in Britain."] And, as my hon. Friends on both sides say, built in Britain.

The great fear in N.A.T.O. today, not because of Britain's bad record but because of the British Government's bad record, is that we might disengage in Germany and reduce B.A.O.R. to a token force as we have disengaged in the Mediterranean and the Middle East and are doing so east of Suez and in the Far East, both politically and militarily.

N.A.T.O., in my opinion, was never sufficiently conscious of its vulnerable southern flank. There has been a great deal of talk and thought about the northern flank and Scandinavia, and the southern flank was always thought to be resting on the security of N.A.T.O. navies in the Mediterranean. Now, apart from the American fleet there, there is next to nothing left.

We are now out-flanked and this outflanking, both political and military—and I want to rub this in because not enough is ever said about it—on the southern flank of N.A.T.O. stems from the treachery—and I use the word deliberately and advisedly—of the Labour Party in 1956 when, between August and September, they went back on their word, given in this House by their accepted Leader, to support Britain and other Suez Canal users and help them to insist upon their rights in the Canal.

We know very well what has happened since then—the 1956 Israeli-Egyptian war, the necessity for British and French intervention in that war, the 1967 Israeli-Egyptian war, the Egyptian intervention in the Yemen, the denial of the Canal to the Israelis contrary to international agreement and contrary to U.N. will, all the bloodshed and the terrorism and the troubles in Aden. All these stem from those shameful days in 1956 when the Labour Party first pledged its support for Britain and other Canal users in their legitimate rights and then went back on its word.

What do we have as a result? We now have the Russian fleet in force in the Mediterranean, based on Egyptian ports, astride Europe's former principal oil route, with air bases in Egypt and refuelling at Alexandria, although the recent action of the Israeli artillery may have made that a little difficult. In Algeria, at Colomb-Bechar, is the space research station on which the French spent about £100 million and which is now virtually at the beck and call of the Russians, an ideal missile based aimed at what Sir Winston Churchill once called the soft under-belly of Europe. We know what the present troubles between Greece and Turkey may lead to and we know very well that much of them can be attributed to Russian meddling in troubled waters.

I should like to quote to the right hon. Gentleman a passage from a speech by General Heussinger, a man of whom he no doubt knows and whom he has probably met. [HON. MEMBERS: "A Nazi."] As the right hon. Gentleman knows, General Heussinger had to fight for Germany during the last war, but was by no means a Nazi. Hon. Members opposite may not know that many Germans had to fight for their country during the last war—

Mr. Orme

So did we—

Lieut.-Commander Maydon

Who were not Nazis any more than hon. Members opposite can be accused of being Nazis.

Mr. Orme

We fought against them, not for them.

Lieut.-Commander Maydon

In a speech at Heidelberg University recently, General Heussinger said: The military threat to Western Europe lies in the Near East, that is to say, in the southern flank of N.A.T.O. If the East"— meaning Soviet Russia— were to gain possession of this territory it would not only mean free access to the African Continent by land, it would also break open the southern flank of N.A.T.O., seriously threaten the Mediterranean area, and possibly even gain possession of it. What the right hon. Gentleman and his colleagues are now doing will aid this process. They have already cut our forces to a degree where further cuts of this nature cannot be accepted for the safety of the country, or for the safety of our allies.

I particularly ask the right hon. Gentleman once again to think once more about "Victorious". This is one little recompense which he could give the country—spend £1,500,000 on saving "Victorious" and keeping her in case of an emergency in the course of the next few years. That at least would be some small service. I ask no more from him.

5.44 p.m.

Mr. Emrys Hughes (South Ayrshire)

One would think from the speeches of the Opposition that this was the first occasion on which defence cuts had followed an economic crisis. I well remember the crisis of 1931 when the then predominantly Conservative Government proceeded to make very drastic cuts in the Armed Forces, succeeding so magnificently that they had a mutiny in the British fleet at Invergordon. I hope that when the economies are worked out, as I hope they will be worked out, there will be no undue hardship to the men serving in the Armed Forces, no repetition of Invergordon.

It is surprising that hon. Members opposite should get so excited about defence cuts. They do not seem to realise that the predominantly Conservative Government made cuts in 1931. I am old enough to remember and I think that the soldiers and sailors in the Invergordon Mutiny were right to take direct action, a thought which, of course, will horrify hon. Members opposite.

The economic crisis has come and it has forced the Government again to consider defence cuts as a contribution to facing the crisis caused by devaluation. My right hon. Friend painted such a glow ing picture of the results of these defence cuts that I was surprised that he had not advocated devaluation two or three years ago, because devaluation seems to have been a splendid thing from which we will gain in defence expenditure and in defence policy.

I want to consider the position of other countries now regarded as our main competitors. Are we not faced with economic war or competition with countries which do not have this colossal burden of defence expenditure? Western Germany cut her defence expenditure without devaluation, and nearly every other country in the Common Market has a lower percentage expenditure on armaments than we have.

In August I visited Japan, a country defeated in the last war and the first to suffer atomic bombing. There is a booming economy in Japan and practically no defence expenditure. There is some, but nothing on the lines of ours.

Mr. Orme

The exact figure, as my hon. Friend will be aware, is 1.2 per cent. of the gross national product as compared with 6.7 per cent. by Great Britain.

Mr. Hughes

I thank my hon. Friend for those figures which substantiate my argument. Japan is a country which lost the war and which during the last 22 years has not put its wealth, its manpower, energy and scientific genius into armaments. The result is that it has built a sound economy from practically nothing and has now become one of our main competitors in the struggle for world markets.

I was at Nagasaki and I saw the ships being built there. They can build oil tankers there more quickly and cheaper than we can here. That is true of the whole of the Japanese economy. Although their country was razed to the ground by atomic bombing, the Japanese emerged, and instead of embarking on a re-armament programme, and going in for aircraft carriers, bombers and atomic weapons they turned to industry.

We are not doing the same thing. People say to me: Was not it a good thing that Japan lost the war? I cannot give the answer. We are faced with immense defence expenditure because we are not speedily getting away from our old imperialist ideas. I do not share the criticisms that have been made of France. I am not of the same political persuasion as General de Gaulle but I do not regard him as the villain of the European peace.

The French economy is so sound that in our recent devaluation crisis she lent us money. This is because France has ceased to have ideas that her economic future depends upon a big overseas empire and overseas commitments. Although France has devalued she did not suffer so severely after all. The main reason why France has today recovered her economic status in the world is because she has cut her commitments overseas, in Algeria.

She no longer has a great overseas empire. She has come out of the Far East and the Americans have gone in. General de Gaulle has taken a prominent part in leading France out of the old imperialist ideas, while we are still clinging to them, though not so much as right hon. Gentlemen opposite. Right hon. Gentlemen opposite criticise us for leaving Aden, but I remember Sir Winston Churchill announcing in this House that we would give up the Suez base. He said that it was quite wrong to have a base in a country which did not want as. I remember the Suez group which used to sit on these benches, and how it assailed Sir Winston Churchill for leaving the Suez base. Today we are criticised for leaving Aden, whereas I believe that the evacuation of Aden is a good thing because we will no longer be regarded as enemies and there will be a considerable reduction in our national expenditure.

I want to come a little nearer home now. The Minister said that there was to be a reduction of £2 million in nuclear expenditure.

The Minister of Defence for Administration (Mr. G. W. Reynolds)

A reduction in nuclear research.

Mr. Hughes

I accept the correction. The Minister said nothing at all about the Polaris programme. Surely the whole purpose of that is that it forms a nuclear deterrent. How did it begin? It began when Mr. Macmillan, the then Prime Minister, concluded the Nassau Agreement. At that time the then Tory defence programme, based on Thunderbolt, had collapsed and we were given the Polaris programme which was originally for five nuclear submarines.

It is an undoubted fact that when we were the Opposition we condemned the whole idea of the independent deterrent. The present Prime Minister scornfully disposed of the whole idea behind the Polaris agreement. I remember that it was assailed too by the former Paymaster-General, who is no longer taking the interest in the speed of aeroplanes, but has transferred his interest to the speed of racehorses. In opposition we denounced the Polaris programme, as part of the independent nuclear deterrent, as being expensive, futile and something which absorbed a great deal of our national wealth.

The right hon. Member for Wolverhampton, South-West (Mr. Powell) has views on expenditure on nuclear weapons. He resigned from the Government because he said that we could not afford nuclear weapons. When this Government came into office they looked at the Polaris programme and they cut the number of submarines from five to four.

We have gone on with the Polaris programme, which, in the estimate given to us by the Minister, and in the brochure circulated by the Navy section of the Ministry of Defence, is said to involve an expenditure of £370 million. That is not a small sum. As a Labour Government we are actually spending more on the four Polaris submarines than the Tory Government contemplated spending on five.

I would like to ask the Minister of Defence for Administration to give us some elucidation of these figures. I have a great admiration for him but I hope that he will take a little more time than usual in replying, and not deliver a machine gun fact-after-fact oration, which we cannot interrupt because we cannot follow him, since, once we have reached one sentence, he is about six sentences ahead. I would like these Polaris figures explained.

Last week I asked a Question about the cost of the latest submarine and was told that it was £52 million, before coming into operation. The cost of four will be £208 million. When the Tory Government told us about this they said nothing about extra costs, and these have mounted. We did not hear that there was to be a very expensive Polaris base in the West of Scotland. The estimates given by the Minister show that the cost of this base is £45 million. There is also a floating dock and other ancillaries.

How does this expenditure amount to £370 million? There is no suggestion of any economy at all. There is an elaborate submarine school, which costs £10 million equipped with the latest scientific instruments. At a time when education authorities can hardly buy tape records, this base is filled with the most expensive and elaborate computers. Then there is the storage of atomic missiles. We have a depot at Faslane which costs us a few more millions of £s. We are to store atomic missiles and weapons within a radius of 25 miles of the second biggest city in these islands.

I should like a further explanation about these figures. To spend £45 million on the base is irrelevant to the economic needs of the country. My hon. Friend the Member for West Stirlingshire (Mr. W. Baxter) and I visited the base two years ago. I appealed to the Prime Minister to stop the work so that the bulldozers, cranes and modern construction machinery could be diverted to building the advance factories which Scotland needed in order to face the economic problems of the future.

Sir Arthur Vere Harvey (Macclesfield)

What did the Prime Minister say?

Mr. Hughes

My appeal was ignored. The result is that the advance factories, which should now be turning out goods for sale in the markets of the world to save our economic position, are buried under the concrete and rubbish in Faslane.

That is an example of the economic waste which is going on. The labour, materials, scientific energies and assets of this country are being used in the wrong direction. The cost of the school and the base constitute an absolute scandal and is absolutely unjustifiable. When our candidate at the recent Hamilton by-election was asked about the cost of the base, what could he say? The Scottish Nationalists are against this expenditure, which helped them to win the seat.

What about the submarines themselves? Technological advance is very speedy these days. There is every reason to believe that the submarines are obsolete for the purpose for which they are intended. The Americans are no longer building them. They say that, with the new defensive arrangements in the Soviet Union, Polaris missiles could not get through and they have invented a more expensive missile called the Poseidon, which we cannot afford. Therefore, when the four submarines are delivered, they will be obsolete. The Government made a great blunder in that they did not cancel the Polaris programme when they cancelled the TSR2.

What is the system aimed at? It is supposed to be a deterrent against the Soviet Union. We are told that there will be no major war in Europe; there is no danger of it. Yet, according to the Secretary of State, next year we are to get a massive delivery of hardware—frigates, missile ships, and all the elaborate machinery of modern war. What is the purpose of it if there is not to be a major war in Europe?

These cuts are not based on any principle at all. They are based on temporary expediency. The Secretary of State said that the capital investment in the nationalised industries is to be restored. He argued that in time the capital investment in the defence system will be restored, too. Therefore, there is no military, political or economic sense in the course which we are pursuing. We are frittering away the resources and manpower of our country.

We talk about the 1970s. With the present rate of technical change, in three of four years the whole of the elaborate structure of armaments will be obsolete. We shall have wasted thousands of millions of £s on the assumption that in the nuclear age we can defend ourselves in a war with the Soviet Union.

I believe that we are on the wrong road and that economic necessity must force us completely to revise our military commitments and our ideas about the future defence expenditure of this country. I do not know what it is likely to be, but I do know that we have been told that we are not going into a nuclear war with the Soviet Union alone. That is very sensible. But we are being tied to the policy of the United States. In Vietnam, we are supporting the Government of South Vietnam. We have spent £360,000 in giving them a free advisory police force. It is said that if the war in Vietnam stopped there would be one million unemployed in America and there would be a crisis on the American Stock Exchange. I should be concerned with the one million unemployed. I believe that the Americans could reabsorb those people in their own country. I am not worried about whether shares go down on Wall Street.

We must revise our ideas completely. As long as we spend money in this way we will offend the common sense of the people in the Labour movement. We will continue to lose by-elections, and we deserve to do so. It is not possible to go halfway in disarmament, any more than it is possible to go halfway in a revolution. These temporary, hurriedly-got-together economies are a mistaken conception of the problems which we face. We are no longer an imperial power. We are no longer entitled to spend the money of our people on this kind of defence strategy. The time must come when the common sense of the people leads them to say that we must stop this because it is a burden on our shoulders which prevents us from raising the standard of life of our people.

6.8 p.m.

Mr. Michael Hamilton (Salisbury)

We always enjoy listening to the hon. Member for South Ayrshire (Mr. Emrys Hughes), and we are all conscious of his interest in defence. Not long ago he came to my constituency and visited the establishment at Porton. I can never find a single point on defence on which I agree with the hon. Gentleman, but I agree with his strictures on the Government. What they said in 1964 bears no relation to what they say today.

This has been a curiously unhappy debate. The only ray of sunshine is that we are delighted to see my right hon. Friend the Member for Harrogate (Mr. Ramsden) back in his place on the Front Bench, because there are few people in the House with so long a personal experience in dealing with the Army.

The Secretary of State for Defence put the House this afternoon into a very unhappy mood. I could not make up my mind which side of the House was left more confused and unhappy by his speech. In the two-day debate on devaluation last week I noticed that the Secretary of State for Defence hardly put his nose inside the Chamber. It is true that he dutifully appeared for the Prime Minister's speech and came here during the last minutes of the final stages of the second day. We all had to do that, however, because both sides had a three-line Whip. Certainly, I gained the clear impression of his being totally unconcerned by the fact that devaluation had necessitated further savage cuts in his Department.

This attitude shown by the Secretary of State for Defence has prevailed for too long. We know that the Government lurch from one financial crisis to the next. During the past summer we had the £100 million cut in overseas expenditure, and now we have this most recent package. On every occasion, the same charade is enacted. The Secretary of State for Defence comes to the House and tells of further cutbacks, cancellations, rephrasings and slowing-down. Then he tells us with a bland smile that the changes are only peripheral and that the Government's defence policy remains basically unaffected.

It seems to me that either the cuts are bogus, designed to appeal to what the Minister himself described earlier this afternoon as the sea-lions—his Left wing—or they are designed to hoodwink Britain's creditors into believing that something is being done. If the cuts are not bogus, it is about time that we had a new Secretary of State for Defence. It is clear, as my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan Giles) has said, that the right hon. Gentleman is not prepared to stand up to the Treasury Ministers in defence of his own Department.

If essential spending has to be cut, that is something which I can understand, but as long as we continue to recruit tens of thousands of additional civil servants, as long as we continue to dish out free medicines to those who can well afford to pay for them, as long as we continue to lavish public money on the arts or on buying up provincial bus companies, I shall remain disappointed that the Secretary of State for Defence is not prepared to stand his ground on a point of principle.

It is true that last year one of his Service Ministers—and I am delighted to see the hon. Member for Woolwich, East (Mr. Mayhew) present—and the First Sea Lord resigned in protest against proposed cuts, and I respect them for it, but the Secretary of State for Defence is clearly made of different stuff. He prefers to continue with this same humiliating round of charades.

Mr. Russell Kerr (Feltham)

Dry your eyes.

Mr. Hamilton

The hon. Member tells me to dry my eyes. Perhaps I feel this rather too keenly.

My constituency makes a contribution to the defence efforts second to none. We have within our boundaries the headquarters of Southern Command. It has been there for decades. It is at present being turned upside down and already, before the present set of cuts, there are redundancies. In addition, my constituency has within its boundaries Boscombe Down, from which, in 1965, the TSR2 made its brilliantly successful test flights. Every day that passes confirms more strongly what a mistake that cancellation was. Thirdly, we have within our boundaries several very important research establishments.

Today, we learn from the Secretary of State for Defence, if I heard him aright, that there are to be cuts in the research establishments of not less than £8 million. As my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) said recently, this is a curious attitude coming from a Government forged in the white heat of the technological revolution". Representing such a constituency, it is hardly surprising that I resent this constant retrenchment and retreat by the Secretary of State for Defence to keep his colleagues below the Gangway happy.

It may be that I am too naive in accepting things at their face value. We were told in the autumn of 1964, in the Government's election manifesto: Our stress will be on the strengthening of our conventional regular forces. Then there was that famous speech at Plymouth—I need not say who made it—when we were told: We believe that in the present conditions of the world, we need a stronger and more effective Navy. Somehow, since all that was said, things have changed. I know that many hon. Members opposite will agree when I say that I no longer charge the Government with inconsistency. I now know, and so do my constituents, that if an undertaking is given, all doubt is removed and uncertainties vanish. We can now be sure that the exact reverse will take place. Nowhere does this apply more strongly than in the critical sector of defence.

I do not enjoy the process of criticising Her Majesty's Ministers. My remarks are not particularly directed at the Minister of Defence for Administration, for whom I have great personal respect, but more particularly at his right hon. Friend the Secretary of State, who, I am sorry, has left the Chamber.

It was in a defence debate earlier this year that the Foreign Secretary said: The consequence of any ill-considered withdrawal of our forces from the mainland of Europe would be disastrous."—[OFFICIAL REPORT, 28th February, 1967; Vol. 742, c. 288.] Yet how often did Ministers of the present Government say that devaluation would be disastrous? Now that they have devalued, what makes me nervous is the thought that this will be used as a pretext for abandoning our N.A.T.O. allies and for withdrawing troops from Germany.

The trouble is that the Government say one thing but they do another. I am sure that hon. Members will not mind my reminding them of that charming little passage: Then you should say what you mean', the March Hare went on. 'I do', Alice hastily replied; 'at least—at least I mean what I say—that's the same thing, you know'. 'Not the same thing a bit!' said the Hatter. 'Why, you might just as well say that I see what I eat" is the same thing as "I eat what I see!"'. I think Lewis Carroll had nothing on this Government. I remember so well that four months ago to the day my right hon. Friend the Member for Wolverhampton, South-West said in the defence debate: This is absolutely topsy-turvy—the notion of beginning with a figure years ahead and seeking to work backwards from that to the composition, size and commitments of the defence forces."—[OFFICIAL REPORT, 27th July, 1967; Vol. 751, c. 1015.] It is pure Alice in Wonderland over again: 'Write that down,' the King said to the jury, and the jury eagerly wrote down all three dates on their slates, and then added them up, and reduced the answer to shillings and pence. We have endured this juggling with figures and this mumbo-jumbo from the Secretary of State for Defence for far too long. It is a conjuring trick, as the hon. Member for Bosworth (Mr. Wyatt) said to his right hon. Friend earlier a is year, a conjuring trick designed to deceive the innocent and the unwary. It is sleight of hand intended to make us think that vast savings are being made. I think that I date my own distrust of this Government's defence policies from the moment when they announced, shortly after taking office, that they were going to carry out a fundamental review of defence. Reviews are much loved by this Government. They have many advantages: they are an excuse to do nothing: "Please do not disturb, we are carrying out a review; please do not ask awkward questions, we have not yet completed our review." They are a signal that the Government have not made up their mind, that they do not propose to make up their mind, that they intend to play things by ear, to live by the day, and to have no defence policy at all.

We shall never see the result of this Government's defence review. It was never intended that there should be any results—the awful fate of the National Plan showed the folly of that sort of thing. Instead, we are served up with cuts and cancellations at ever more frequent intervals, and we continue to endure a Secretary of State for Defence who is not prepared to risk his neck and to say to his colleagues, "Thus far and no farther."

6.23 p.m.

Mr. Russell Kerr (Feltham)

I am sorry that the hon. and gallant Member for Wells (Lieut.-Commander Maydon) is not in his place, because some of us on this side of the House who had the honour to serve in Her Majesty's Forces during the last war deeply resent his quoting a Nazi general with approval in this House of Commons. I am sorry he is not here to know that this view is shared with myself by a number of my hon. Friends on this side of the House. Some of us are just a little less than objective on this subject, if only because of what our comrades suffered from Nazi hands during that war.

But to come to more serious things, the difficulties of the last week, following from devaluation, are very much connected with the matters which the House is discussing this afternoon. It is no possible, in my opinion, to deny the fact that a good part of the chronic economic difficulties which this country has suffered for about 20 years now has been due to the attempt to hang on to a major Power rôle, carrying with it, we are told, a seat at the Top Table, long after the economic strength necessary for such a responsibility had left us.

Belatedly, the Government gave some recognition to the debilitating effect of this quite fantastic defence burden of around £2,200 million, or, as my hon. Friend the Member for Salford, West (Mr. Orme) pointed out, of about 6½ per cent. of our gross national product, by their decision to reduce quite substantially out east of Suez and other commitments, but the fact is that, even after these cuts, we still spend per head of our population around 50 per cent. more on so-called defence than the countries of the Common Market do, where the average spent on defence is around 4 per cent. of gross national product. We have greatly increased our economic difficulties by maintaining this fantastic defence burden, which is, no doubt, a relic of our days as a leading imperialistic Power, now a very out of date relic.

A reduction of this burden by about £100 million as part of the post-devaluation measures appears in these circumstances almost a joke in bad taste, and calls into question the seriousness of the Government in their avowed aim of spreading fairly the burden of devaluation. No old-age pensioner, finding his already inadequate income effectively clipped by as much as Is. in the £, will be persuaded that the cut in our defence costs by such ludicrously small proportions is fair in the circumstances.

Personally, I believe that devaluation gives us the opportunity to get rid once and for all of a great deal of the mythology and nonsense and the very bad policies with which various Defence Ministers, not, regrettably, excluding the present one, have saddled the country for most of the post-war years. For me, it has always been a matter of great wonderment that two of the considerations which Government Departments normally have to take into account in their planning, namely, economic feasibility on the one hand, and common sense on the other, have to all intents and purposes been totally ignored, and with apparent immunity, by the Ministry of Defence, whose policies, good and bad, have seemed over the years to develop a momentum of their own and eventually to take off into the stratospheric heights of cloud cuckoo land. From this safe but rarified altitude our defence planners have been able to mock and ultimately to destroy the best laid economic plans of this and earlier Governments, and so, of course, to keep great numbers of our people in poverty and insecurity.

I am referring to the thousands of millions of hard-earned pounds which have been wasted over the past decade and more on a whole variety of expensive military projects like Skybolt, to which my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) meant to refer this afternoon, and also, which is something I have been personally very much interested in, the F111; and also on maintaining at enormous cost the military bases from which, like Aden, we regularly get booted out, usually to the sound of uncomplimentary epithets from the local population; or, alternatively, as in the case of the Rhine Army in West Germany, we are played for suckers and are forced continually to pay the piper without in any significant way calling the tune.

This brings me to the main point that I want to make. At a time when the Government's attempts to run the economy by the use of traditional Tory methods of deflation and the retention of sterling in its present world rôle have demonstrably failed, surely it is almost insulting to ask ordinary people to accept the rigours of devaluation, with its near catastrophic effects on the living standards of millions of pensioners and others on small incomes, when we refuse to do more than make a nominal reduction in this quite nonsensical defence budget. To reduce it by £100 million, as proposed, when the extra cost of our overseas commitments, because of devaluation, will wipe out the greater part of this so-called saving, as the Minister confirmed this afternoon, is, to my mind, to forget almost completely the people on whom the Labour Party must rely for its support—and also its inspiration.

Of course, the defenders of this policy say, "Ah, yes, that is all very well, but where can we make the cuts without dishonouring our existing agreements and that kind of thing?" Without pretending to specialised knowledge of defence matters, though I do know a bit about the wangles and fiddles which private firms in the aircraft industry get up to, I should like to give the Government and the Secretary of State for Defence two certain winners in the Defence Reduction stakes due to be run any day now.

These two horses, both sired by Top Table out of Self Delusion, go by the names of F111 and Rhine Army and each of them is a very expensive neddy indeed, hundreds of million of pounds in each case. Of the first "brumby", F111, I would only say that if ever it did have a military justification—and very few experts ever said that it had—certainly that justification has disappeared now with the massive withdrawal which we are planning from east of Suez in the near future.

Moreover, any qualms we may have had about cancelling this ruinous project can safely be dismissed after the recent humiliating rejection of the offset purchase agreement by the United States Congress, a performance which, according to various people to whom I talked recently in Washington, is likely to be repeated again and again in the months ahead for reasons which are only too obvious to students of American politics.

The Minister I hope will note that I have made no reference so far in my remarks to the 285 defects which Air Force examiners recently listed in regard to the F111 though, I grant him, they are not precisely to do with the model which this country has on order. There are, of course, other items of defence equipment which we are buying from America which, in my opinion, also rank highly for the chopper. I think that many of my hon. Friends who think like me on these matters would be prepared, how ever, to settle for the cancellation of the F111 for a start—for this week at least.

The other runner which I give free to my right hon. Friend—and this is a very hot favourite—is the British Army of the Rhine in Germany. Much has been said on this subject, notably and most eloquently by my hon. Friend the Member for Salford, East (Mr. Frank Allaun), but the fact remains that we are spending £195 million a year on this exercise. £95 million of which is in Deutschmark, and the amount of offset being received by way of the supposedly increased purchases of our equipment by West Germany is almost insignificant, and would probably have happened anyway.

As I said earlier, we are being played for suckers, and, to make matters worse, the people who are "conning" us in this way do not really need the money. They have the most buoyant economy in Western Europe, and, in the Australian phrase, these days they are "lighting their cigars with rolled-up £5 notes".

There are, I admit, other horses worth looking at in the Defence Reduction stakes. But with the contenders already under starter's orders, I advise my right hon. Friend the Secretary of State for Defence to get his bets laid on these two quickly—and £300 million was the figure I had in mind. I ask this so that not only he and the Government, but also, more importantly, the millions of people to whom we on this side of the House owe our allegiance, can have something to celebrate in a year or two from now rather than having to weep on one another's shoulders at the opportunities which were lost and the national tragedy which had overtaken us.

6.34 p.m.

Sir Ian Orr-Ewing (Hendon, North)

I will not follow the excellent speech of the hon. Member for Feltham (Mr. Russell Kerr), but I should like to pick up one or two points which the Secretary of State made in opening the debate for the Government. Two points in particular amazed me. He had the effrontery—I am sorry to say—to suggest that cuts were made only as commitments were reduced. I feel that I can safely leave that remark to his right hon. Friend the Member for Woolwich, East (Mr. Mayhew) if he catches your eye, Mr. Speaker, because he has torn that alle gation apart time after time, and I am entirely in agreement with his arguments.

The second point is the Secretary of State's assertion that he is determined ruthlessly to have value for money. I shall deal with that matter later. We had today the usual recitation of how the Conservative Party programme which had been planned ahead—incidentally, it was planned ahead, and that despite the fact that the right hon. Gentleman sometimes likes to say that there was no planning ahead—would have cost very much more than the present programme. He then argues that he has made savings of hundreds of millions of pounds.

The right hon. Gentleman should remember that in planning our programme ahead we assumed that the country and the economy would grow in wealth at about 4 per cent. a year whereas he is now having to plan ahead, on the assumption, presumably, that we are down to 2 per cent. growth a year, or will have the stagnant economy that we had had since January 1965. I was shocked—and I shall develop this apart from the main body of my speech—about the suggestion for scrapping "Victorious".

I should also like to remonstrate on the fact that there was a Press conference first and that, therefore, we had to get the first details of these cuts and their implications from the national newspapers rather than first hear about them in the House. I know, Mr. Speaker, that you understand that we feel jealous of the privileged position of the House of Commons, and we hope that in future the Minister will find opportunities to make these announcements first in the House and not at Press conferences or the B.B.C.

I have been looking through the various White Papers which the right hon. Gentleman has produced. In the 1965 White Paper the main them was that we were over-stretched. There was the subsidiary theme of cutting down overseas expenditure. Then we came to the 1966 White Paper, which was heralded as the first serious defence review we had ever had. The theme then was that we must cut down our foreign exchange expenditure. Again it was said that we were still over-stretching our military manpower when we needed manpower in the export industries. We came to 1967 and the first of the 2½ White Papers which we have had. Again we were told that the manpower was over-stretched although this argument soon became unrealistic because we were building up to an unemployment figure of about 500,000 so that it was hardly realistic to suggest that the nation was desperately short of manpower.

In the second 1967 White Paper we thought that perhaps we were coming to the end of this disastrous series and that the defence Services would be given an opportunity of stability so that they could study their basic commitments and plan their lives. This was borne out by the statement, which the right hon. Gentleman repeated in his speech: This Statement announced new decisions where these can or must be firmly taken—not least to provide a period of stability in which the Services can plan manpower and careers… There is no one who cares for the wellbeing of our defence Services who would not say "Hear hear" to that.

But even that White Paper was not enough, and we come to yet another rearrangement. It may be that it will take its main toll on equipment, although I think we are told that there might be an accelerated rundown in certain areas east of Suez. All that must sow uncertainty in the minds of our Service men and women. We are again told that there is over-stretch. One has reluctantly to come to the conclusion that the Labour Party simply loathes spending money on defence—[HON. MEMBERS: "Hear hear."] I thought that I should get applause for that comment, and it bears out my view.

Mr. Mendelson

I said, "No".

Sir Ian Orr-Ewing

It seems to us that they pretend that they wish to honour alliances and commitments, but that when Britain is called upon to carry them out we shall have neither the type of equipment with which nor the bases from which they can be honoured. The Labour Party always seem to put welfare before defence. It is perhaps rather ironical that today we should have been debating the Family Allowances and National Insurance Bill and that as there are difficulties in the Cabinet which meant that this Bill had to be postponed while Amendments were being drafted, we are instead debating defence at the instigation of the Opposition.

In every series of cuts that we make there is always a sop to the Left wing to keep them quiet. I hope that the right hon. Gentleman is beginning to learn that it does not keep them quiet. Whatever he does with his figures and his arguments, it still does not keep them quiet. Would it not be a good thing to give the idea up and to think instead about the defence of the nation and its vital interests?

Mr. Mendelson

From what the hon. Gentleman said of his knowledge of the Cabinet it sounds almost as if we have a Coalition Government already. But he is a little premature in all his knowledge about the Family Allowances and National Insurance Bill. If he is worried about the Government's intentions he should have listened to my right hon. Friend, who stated the traditional position of the Labour Party, which is that we shall keep our defence forces properly equipped. There can be argument between him and me on whether we should reduce my commitments, but my right hon. Friend has certainly proved that he is not trifling with the efficiency of our forces.

Sir Ian Orr-Ewing

The hon. Member and his right hon. Friend should get in touch with the editor of "Labour Party Talking Points", because one reads in No. 16, issued earlier this year: Resources have been switched from defence to the social services, which is the right priority for a Socialist Government. I see from his nodding that the Minister of Defence believes this. If so, it is a strange concept for a man responsible for the well-being of the country's defence forces.

The hon. Member for Woolwich, East, whose statements and articles always demand the most careful consideration, writing in the Daily Herald in 1951, said: The hard truth is that expenditure on defence will lessen the chances of world war more than expenditure on welfare at home or overseas. That is what we on this side believe We now know that the Minister is taking a risk, and that is why we so much resent this last series of cuts in this third White Paper—if I may so term it—because he has admitted this time that he is taking a risk that no previous Minister of Defence has taken.

Mr. Healey

I am sorry to have to interrupt the hon. Gentleman who, I know, takes these things seriously, but to hear him talk one would think that he was totally ignorant of the fact that every military operation in which our forces have been engaged in the last there years has been a great success whereas, under the previous Conservative Administration, our forces were committed to the operation at Suez, which was a ghastly and humiliating failure, not only because it was politically ill-judged but because our forces were sent in without the training and equipment required for the operation.

Sir Ian Orr-Ewing

On some other occasion, I should like to have a debate on Suez, but on this occasion I will only say that if we had been supported by the Opposition of that day we would not be in our present position, and ships of all nations would be going through an international waterway operated under international treaty.

All these White Papers have put forward the idea, that, somehow, in cutting down defence we redeploy skilled manpower into our export industries. That idea was first put forward by the Chancellor of the Exchequer in his Budget speech in 1965, when he announced that the TSR2 was to be cut. He told us then that there would be a large exit of manpower from the aircraft industry to export industries. What has happened, in fact, is that there has been a large exit of skilled manpower as part of the brain drain, and, at the same time, that we have been cutting our defence forces in numbers we have been building up the numbers of our civil servants, so that when the right hon. Gentleman announced in July a cut of 37,000 in our defence forces over the next four years—

Mr. J. T. Price (Westhoughton)

The hon. Member is making a very urbane speech with his usual good nature, but I would remind him that the prophecies made by hon. Members opposite at the time of the cutting of the TSR2 was that it would result in a very serious un employment problem in Preston and other towns where these machines were being manufactured. The fact is that nothing of the kind has taken place. All the men displaced from that operation have been re-employed elsewhere—[An HON. MEMBER: "America?"]—and not just in America.

Sir Ian Orr-Ewing

I am glad to have the hon. Member's assurance, but the brain drain that was just a trickle is now a river. It is also true that while we have been cutting our defence forces we have been increasing the Civil Service, so that we now have 45,000 extra civil servants dealing with complicated new legislation and administration.

Now a word about the TSR2's successor, the F111. It is difficult to understand now why we are buying 50. The cost must have risen from the original £150 million by at least another £20 million as the result of devaluation even if the difficulties the aircraft has met do not add further to its costs. I should like to know how this aircraft will operate when there is now, apparently, no question at all of an Indian Ocean island base from which to operate. In that case, how are we to honour our Far East commitments? This must strengthen the case for keeping carriers in being.

The right hon. Gentleman was at one time a great supporter of carriers. He always told us when we were in Government that we were wrong in not keeping three or more carriers. In the 1966 Defence Review he was still supporting carriers. He stated: In order to give time to reshape the Navy and to reprovide the necessary parts of the carriers capability, we attach great importance to continuing the existing carrier force as far as possible into the 70s. On 22nd February, 1966, the Secretary of State for Defence said: We shall keep our existing carrier force as long as possible into the 1970s."—[OFFICIAL REPORT, 22nd February, 1966; Vol. 725, c. 241.] and the hon. Gentleman the Member for West Bromwich (Mr. Foley) said: In other words, we envisage the carriers continuing through into the 1970s."—[OFFICIAL REPORT, 1st March, 1967; Vol. 742, c. 532.] But, in the supplementary statement on defence policy, last July we were suddenly told that "Victorious" would go in 1969, and "Hermes" only in 1971. That is not very far into the 'seventies.

Surely, the one lesson that we have learned since the end of the Second World War is that no Minister of Defence or his advisers has been able to foresee exactly where Britain would need to deploy troops. We therefore need flexible and versatile forces and, if we want value for money, these forces should be built round the aircraft carrier. There is no other way of protecting merchant shipping and task forces, or of deploying air power.

It seems sinister to me. We have refitted "Eagle", which is one of our big ones—43,000 tons—and "Ark Royal", of the same size, is now being refitted at Devonport so as to take Phantoms. This refit will cost £30 million or £40 million. It was started in May of this year and is due to be completed in 1970. That means that until 1970 we shall have only the one big carrier—"Eagle".

This makes it all the more essential for us to keep "Victorious" in reserve. It is our third biggest carrier—34,000 tons—and was due to be phased out in 1969–70, presumably as "Ark Royal" was phased in. We heard today of the small cost which might be £¼million or £½ million to bring her back into operation service, but we have been told by the Secretary of State for Defence—how wise he was to leave the Chamber before I statrted on this—that "Victorious" is to be sent to the scrapyard as soon as possible.

Why scrap a perfectly good modern carrier on which a great deal of money has been spent on refit? There are such things as accidents, groundings, fires—even sabotage—which make it wise to keep the vessel in reserve. Would the Secretary of State have had "Albion" and "Bulwark"—commando carriers—if they had not been kept in reserve for a long time? As it is, both were there when the need arose. We were thus able to supply commando carriers, and both Governments have acknowledged their success. They were available because they had been kept for some time.

We still have "Leviathan" lying in the Portsmouth Roads. She has been there for 20 or 30 years. There has been no rush to reduce her to scrap. "Triumph" was lying about for a long time before being converted to a very useful purpose. If these are the dividends we have got from keeping some carriers, what makes the Government announce today that "Victorious" is to be sent to the scrapyard as soon as possible after pay-off? Is this an effort to appease the Left wing? If so, I ask the Government to have the guts to stay this execution, because we might need her in the defence of Britain's interests in the future.

A little off my main theme, I ask the Government this. They have told us that they will maintain commitments and obligations east of Suez. We are told that the Anglo-Malaysian pact is still in being. We were told in the July White Paper that S.E.A.T.O. obligations were still maintained. Is it not time to try to call together our American allies and the Commonwealth Powers—New Zealand, Australia, Malaysia and the rest—to form an up to date defence pact for that part of the world? Surely the Government should take the initiative while there is time and while we have a considerable force in that area. We are people who could best do this; we could act as catalysts in this area. I urge the Government to take some initiative in this matter before it is too late because, if we fail to set up a new defence pact for that part of the world, we may see the spread of Communist pressure there.

When we have the winding-up speech from the Government side I hope that the categorical assurances for which my right hon. Friend asked concerning the future of N.A.T.O. and the number of troops we deploy in B.A.O.R. will be given. When the defence debate took place at the end of February this year the Secretary of State for Defence, who opened the debate, seemed to suggest that he was quite happy to run down B.A.O.R. strength and to rely more on nuclear weapons for the defence of Europe. Fortunately, the Foreign Secretary was a little more robust. He was the opening speaker in the debate next day, and, to my surprise, he took exactly the opposite view. He said that we are not to shift one man out of Europe. Our position today is much more difficult than it was then. We are still applying to get into the Common Market and General de Gaulle is getting more and more touchy. [An HON. MEMBER: "It is all over."] Surely it would sabotage our chances if when we are trying to get in we started to withdraw from the N.A.T.O. Alliance and to run down our forces there.

Let us put ourselves for a moment in an American's shoes. They think that we are pulling out east of Suez. I hope that this will be reversed in due course. They think that we are pulling out although we have tremendous capital investment, historical interests and moral obligations in that area. We all hope that at some time in future there may be a settlement in Vietnam. It is quite clear that unless there is some defence pact in that part of the world the Americans may pull out.

Once we get an American retrenchment and the falling back to "Fortress America", can we be sure, if we are not prepared to contribute our strength there, that they will help in bolting and defending our own front door in Western Europe? Why should we ask the Americans to come 3,000 miles across the Atlantic Ocean to do our job? We might then be left with the worst of all worlds—without Europe and without the U.S.A.

I ask right hon. Gentleman opposite to think about these problems, because they must cause anxiety to anyone who thinks about the defence of our nation and its alliances. The defence forces have been made the sacrificial lamb to propitiate the Left. I hope that the Secretary of State for Defence will stop making excuses, stop appeasing the Left-wing, stop the rundown of our forces and stop taking risks—his own word—in the future. If he is not prepared to stop these things, I hope that he will move to another place and leave it to a succeeding Minister of Defence to look after our defence.

6.55 p.m.

Mr. Christopher Mayhew (Woolwich, East)

The criticisms of the Government from the benches opposite would make more impact on the House if they could be seen to emerge from some consistent defence policy, but none of us knows what it is that hon. Members opposite would do instead of the action which the Government are proposing. With a great deal of what they say about our existing resources being inadequate to fulfil our commitments, I find myself in sympathy.

The hon. Member for Hendon, North (Sir Ian Orr-Ewing) made some pertinent comments about the inevitable weakness of the carrier force if both "Victorious" and "Hermes" are scrapped by 1971. The conception of maintaining a military presence east of Suez for at least four years from 1971 to 1975 with two carriers cannot be right. One of the aspects of the accident to "Victorious" is that it was not only unfortunate in itself, but it was a reminded that if we spin out the life of old ships, however good, beyond their normal term they are bound to be accident-prone. Anyone who has had the rather heavy responsibility of keeping a carrier operationally available during confrontation will know how much anxiety one can have on that score.

To maintain a presence east of Suez from 1971 to 1975 with two old carriers seems to be taking an unacceptable degree of risk. On the other hand, what is the answer which hon. Members opposite suggest? Are they suggesting a much bigger defence budget? If so, they should say so more plainly. They go for this east of Suez presence and go further and criticise the Government for not maintaining a defence agreement with Aden and a number of other things. We costed their defence budget once and the Secretary of State made it come to a great deal more than I did. I came to a figure of £450 million a year in excess of the Government's defence budget.

The criticism by hon. Members opposite would come with greater impact if they faced the truth and reality of some of the things they say. However, I agree with one hon. Member opposite who said that this has been a confused and unhappy debate. I confess that I saw this announcement of a £100 million cut in defence expenditure next year with incredulity. After all, it was only four months ago, in the Defence White Paper of July, that the Government announced that they had a balance between our military commitments and our military resources. Now they say that, without cutting the commitments, they can find £100 million of economies in the next financial year.

How does this add up? Does it mean that there their calculations were £100 million out in July? Does it mean that when, in July, they said that we must build up in Aldabra they were wrong and that we did not need Aldabra? Does it mean that when they said, in July, that we need "Victorious" until 1969 they now discover that they were wrong? Does it mean that all those research projects which, in July, they said were necessary, and £60 million worth of minor items which are to be cut now, we are to presume, were passed as essential in July?

We cannot believe that. I cannot believe so ill of my old Ministry as to suggest that after all the examinations of the Defence Review, after all the intense search for economies which have gone on in two-and-a-half years they managed to overlook £100 million. I wish that were the explanation, because I am afraid that the only possible explanation is that this £100 million does weaken the capacity of the forces to carry out their commitments and that a greater degree of risk is being taken than was thought to be acceptable in July last year. I am afraid that this is the case. Rather than cut our commitments, rather than cut the living standards of the people, the Government have decided to impose greater risks on Service men in carrying those commitments on their shoulders.

I have been thinking this afternoon how much it would be to the advantage of the House to be able to question the Government a little more closely about these items in the military budget. If we had some kind of all-party Select Committee, we might be able to ask what these £60 million worth of unspecified cuts are, which part of the research budget is being cut, and what the precise significance of scrubbing "Victorious" is. I despair of asking the questions now and receiving the answers in the winding-up speech. Defence expenditure will never be controlled like that. Defence policy will never be controlled like that. We need a new way of calling the Government to account on these matters.

The cuts are a round figure—£100 million. I am suspicious of round figures in defence Estimates. I remember the £2,000 million pulled out of the hat by the Treasury. What does this £100 million mean? I will say this to my colleagues: the fact that it is a nice round figure like £100 million means that the implications of the cuts have not been worked out properly. It means that no homework has been done. Nice round figures do not come out of consideration by defence planners. Nice round figures are pushed down by harassed Cabinets at the end of meetings when the civilian Ministers are wanting their lunch.

It is not only an arbitrary figure like the £2,000 million was. It is also a last-minute figure. It is a figure of cuts for the next financial year. Anybody with any experience of defence planning knows that defence expenditure cannot be cut or increased on that time scale, not without extraordinary diseconomies of having to pay cancellation charges and that kind of thing.

As my hon. Friends know, I am not challenging the need to make big defence economies. On the contrary, as my hon. Friends know, I have stood for some time now for a defence budget well below the present one. What I am challenging is the Government's refusal again to cut our defence commitments. In his speech this afternoon my right hon. Friend the Secretary of State said, without arguing, without giving any reasons, that it was just impossible either to speed up our withdrawal from Singapore and Malaysia or now to start winding up our military presence in the base.

I add this to my right hon. Friend and to the hon. Member for Salisbury (Mr. Michael Hamilton), who referred kindly to my resignation. I resigned because when the carriers were cut the commitments were not cut as well. That was the point. It was not just that I insisted on having a carrier, as did hon. Members opposite. My view was, on the contrary, that the solution was to bring down our commitments overseas so that we could make necessary economies without putting undue strain on the troops. I have always hoped to make that clear.

Once more today, as we have seen, the Government have decided to make cuts in expenditure, cuts in resources, without cuts in commitments. This brings us further below what I would regard as the acceptable level of risk for carrying out these commitments east of Suez. We shall have now, for years to come, until the mid-1970s, enough resources east of Suez to get us involved in trouble, without having enough to deter conflict or even to win that conflict if it comes. We shall have the worst of all possible worlds.

Furthermore, again, this new move creates instability. The White Paper only four months ago stated that its purpose was to provide a period of stability in which the Services can plan manpower and careers, and adapt their equipment, training and support programmes to changes in their shape and size. That was four months ago. Now we have a change already. We had another abrupt change last July. We had another abrupt change in July of last year. Before that there was the Defence Review.

For two years the Cabinet's handling of defence has been chronically unstable and unrealistic—delusions of grandeur one moment, and panicky withdrawal symptoms the next. If the Minister of Health was in the Cabinet he could easily make a diagnosis for that. Defence cannot be run like that. The truth is that the Government's defence planning has been a shambles and every Service man from the Chiefs of Staff downwards knows it.

Two years ago the Defence Review made a thorough examination of all these problems, and two facts became perfectly plain at that time: first, that our defence commitments were to big for a defence budget of £2,000 million; and secondly, that a defence budget of £2,000 million was too big for our economy. The facts marshalled in the review pointed plainly to the need for a rapid and decisive reduction of our military commitments east of Suez. But this was a hard decision; it was strongly opposed by the Americans and by the Australians, and the Cabinet ran away from it.

Less than 18 months ago my right hon. Friend the Prime Minister was still telling the Parliamentary Labour Party that Britain must maintain a world defence rôle in the Far East, in India, in the Middle East, in Africa, throughout the 1970s, that this could be done on £2,000 million, and that our economy could afford a £2,000 million defence budget. On all three points his judgment has proved seriously at fault. His harsh criticisms of Labour Members who opposed him on this—we were the dogs who bit, it will be remembered—has proved totally unjustified.

I ask myself: has this lesson been learned by the Government? I still hear the ancient incantations about the essential need for a military presence in the Gulf to maintain stability and to protect our interests there. I will not go into the arguments; we have had them so often in the House. We have been told that the economy of Singapore will collapse unless we maintain a military base there for eight years until the mid-1970s. I do not believe that at all.

Yet there are, I agree, some signs of greater realism in the Government. Last July, they agreed that we should withdraw from Malaysia and Singapore in the mid-1970s. I do not question their general wish to make defence economies. In fact, I would make a prediction. I believe that in practice, whatever the Government say now, in four or five years they will have come down to the very level of commitments and the level of defence expenditure that we east of Suez critics were putting forward two years ago. They have already wasted two years, and it will come two years late, and it will come by fits and starts as a result of improvised and hand-to-mouth decisions. It will lead them to incur cancellation charges and compensation payments to the Servicemen which they need not have incurred. It will have led them to give recent renewed assurances to allies and friends which they will have to break and which they need not have given. It will involve the forces in a whole lot of uncertainty and sudden changes which could have been avoided. This is the pattern which seems to be emerging in our Defence Review.

Mr. Frank Allaun

Is my hon. Friend aware that while we are withdrawing from certain parts east of Suez in other parts we are actually building up? Is he aware that, though this week we are, thank God, getting out of Aden, we are to spend in this financial year £12 million on military installations alone in Bahrain? Goodness knows how much it will cost us altogether.

Mr. Mayhew

My hon. Friend and I are on the same wavelength on this matter. I have strongly opposed the buildup in the Persian Gulf. Although the Government may suppose that they should build up in the Persian Gulf and that we shall be there in the mid-seventies, I am not sure that the real world of economics and politics may not, as it has forced them to change their mind in the Far East, oblige them to change their mind again so that a different result is achieved by the time we get to the mid-seventies.

It may be that the N.L.F. in Bahrain—because there is a Bahraini N.L.F.—will have something of the career of the N.L.F. in Aden. The Government did not foresee the success of the N.L.F. in Aden and when they deny any possibility of success for the N.L.F. in Bahrain we are bound to wonder whether their forecast will prove any better this time.

I am not blaming the Secretary of State personally and particularly for the mistakes that have been made. Indeed, if anybody had the ability to make sense of the changing and contradictory directives issued by the Cabinet in this sphere, it would be my right hon. Friend. He has struggled hard, but the task given him these last two or three years has been an impossible one. Now we look to the Cabinet as a whole to make it possible for the Secretary of State at last to devise a defence structure which is adequate to our commitments and which does not put an intolerable burden on our economy.

7.12 p.m.

Mr. James Davidson (Aberdeenshire, West)

It is a tremendous privilege to speak following the hon. Member for Woolwich, East (Mr. Mayhew). If he agrees as much with what I have to say as I agreed with what he has just said, he should join my hon. Friends and me on the Liberal bench. While it is difficult for me to be called to speak after the House has heard such a brilliant speech, it must have been even more difficult for hon. and right hon. Gentlemen on the Government Front Bench to have to listen to such a devastating but well-thought-out summary of the situation as we have just heard.

The problem facing the Government is a very old one. It must have faced every Minister and Government since the war. It is the problem of balancing need against cost. And when one has a cost which represents 22 per cent. of total Government expenditure, or £40 per head of the population in annual defence expenditure, there is obviously an extremely wide sphere for economies to be made. I am not convinced that the economies which the Government are proposing are by any means the right ones.

The purpose of defence—finding ourselves in the 'sixties with a very difficult balance of payments situation—is surely to defend our home country, our trade routes—the lifelines which supply us—to maintain our remaining overseas obligations to our few remaining colonies, which I believe are only Hong Kong, Gibraltar and a few islands dotted around the world. I have checked these facts in the House of Commons Library and I believe that I am correct. We must also maintain our few treaty obligations, to which I will come later and only one of which is of continually growing importance—our obligation to the peace-keeping function of the United Nations. Unsuccessful though it may have been at times, this is still our most important overseas function.

There are three choices open to the Government as to the type of defence force in which they should invest the country's money. First, they can go completely nuclear, both in the tactical and strategic sense. While there is obviously still a need for balance on the Continental scale—and while there may be some need to accept this for a while to come—there is general acceptance among all parties in the House about the need for a nuclear non-proliferation treaty.

We on the Liberal bench certainly recognise the extreme danger of escalation arising from a weapons policy based on so-called tactical nuclear weapons. The idea of an independent nuclear deterrent force had, I thought, already been rejected by the Government—but, of course, they have gone back on this policy, a policy which they put forward strongly at the last two General Elections.

Mr. Emrys Hughes

Is the hon. Gentleman speaking for the Liberal Party? If so, what is his party's attitude to the Polaris base? Is he aware that at the recent Hamilton by-election the Scottish Nationalist was against the base, that the Labour candidate was against the base and that only the Conservative Party supported the base—and the Tory candidate lost his deposit?

Mr. Davidson

I assure the hon. Gentleman that I will be dealing with nuclear weapons later. I think that I will have something to say that will please him. At least, I hope it will. The whole conception of an independent nuclear deterrent has by now—at least, I should have thought that the Government took this view—proved to be not credible, to be far too expensive and something which encourages proliferation while increasing the dangers by having too many fingers on the nuclear button in various parts of the world.

One could possibly accept the concept of a European third force. On this matter the Leader of the Opposition said last May: I propose that France and Britain, each with its nuclear deterrent, should say that we are prepared to have, for example, some sort of committee as there is in N.A.T.O.—the Macnamara Committee or something of the sort—in which members of the enlarged Community can deal with these matters. If this is done in N.A.T.O., I see no objection to its being done in the Community. We would hold the deterrent in trust for these European Countries".—[OFFICIAL REPORT, 9th May, 1967; Vol. 746, c. 1300.] If the Leader of the Opposition would explain exactly what he meant by that I would be grateful. I did not understand it and, having read that passage several times, I still do not understand it.

Rear-Admiral Morgan Giles

As the hon. Gentleman considers that the nuclear deterrent is too expensive, would he be prepared to say what his party considers would be a proper price to pay for freedom from nuclear blackmail and the risk of nuclear war?

Mr. Davidson

I will try to cover that question later in my remarks.

There is a third conception. It is one which my party strongly supports. It is of a de-nuclearised Europe as a bridge between the United States and the U.S.S.R. I will enlarge on this later in my speech.

Meanwhile, leaving aside nuclear weapons, there are two other choices before any Government as to the type of defence force in which they should invest the nation's money. The second—if they are not going all-nuclear—is to have some sort of elite of technicians and highly-trained regulars with a large reserve. This is an interesting idea to explore, but I have not seen any costings on it and, in our present circumstances, it would be impracticable to change to this type of system from the conventional and nuclear type which we now have.

That being so, I come to the third choice; of conventional forces—conventional forces to fulfil our obligations for defence at home and overseas. It is obvious that, for home defence requirements, we still need infantry, armour and artillery; and in artillery I include all the paraphernalia of missiles—but not nuclear types—and so on with which our forces are now armed.

It appears that the Navy still needs vessels armed with surface-to-surface weapons, surface-to-air weapons and antisubmarine weapons for the protection of convoys. We should remember that we are still a maritime nation which receives a very high proportion of its imports by sea. Even in the middle sixties, we must still think of ourselves in terms of needing convoys should we ever find ourselves engaged in a war.

At this point I would remind the House of a fact that I have not heard mentioned very often; that is, that the Soviet Union still has by far the largest submarine [...] in the world—something in excess of 500 vessels. This is something that we should not forget. We are very much under-equipped in the matter of hunter killer submarines.

The Royal Air Force will still require aircraft for interception, ground attack and fighter reconnaissance, and it will require surface-to-air missiles. All three Services will obviously require the ancillary radar warning and guided systems. This covers briefly what we need for home defence.

Mr. Healey

I understand that the hon. Gentleman accepts the need for the Royal Air Force to have some aircraft capable of long-range strike and reconnaissance. If so, how would he propose to meet the cancellation of the F111K which I understand the Liberal Party favours?

Mr. Davidson

I did not in fact say "long-range strike and reconnaissance". I said that the R.A.F. needed fighter reconnaissance aircraft. I will return to this point about the F111K aircraft, because in the circumstances which were so clearly outlined by the hon. Member for Woolwich, East I do not believe that we need this aircraft any longer. However, I will come to that a little later.

For the additional requirements of our remaining overseas commitments, we have Gibraltar, Hong Kong and a few islands to defend, and we have three or four very important treaties. I have mentioned the United Nations Organisation and our growing need to contribute to a United Nations peace-keeping force. The other treaties have been mentioned in various speeches this afternoon. My own view is that the South-East Asia Treaty Organisation is more or less a dead letter. The Secretary of State for Defence mentioned that we had certain paper commitments to this Treaty, but I understand that we have no forces committed to it except a small unit of Royal Engineers somewhere in the depths of Thailand. CENTO is simply a paper treaty.

In the Persian Gulf we have four minor treaty arrangements: one with the South Arabian Federation, one with Bahrein, one with Qatar and one with Kuwait. They are all very limited in character. I have a piece of paper here outlining the basis on which they exist. Having studied the treaties concerned with these four places and having spent over two years in that area a decade or so ago, I do not believe that they justify the keeping of forces there, or, indeed, the building-up of extra facilities in Bahrein in the Persian Gulf.

I would point out in passing a fairly obvious fact, but one which seems significant, namely, that from Bahrein, or for that matter from Singapore, even the F111K aircraft could not possibly reach either Peking or Moscow. It could just about cover the Donbas area and it could just about reach into South China, but it makes me wonder what the purpose of this aircraft is.

Mr. Healey

I would point out to the hon. Gentleman that I have already explained that we have not the slightest intention of using the F111K to reach Peking or Moscow.

Mr. Davidson

I am delighted to hear that. If that is not the purpose, I would very much like to know what the purpose is.

Mr. Healey

This has been explained many times. I think that the hon. Member should attend our debates more frequently if he wishes to know the answer to these questions.

Mr. Davidson

I think it will be agreed that I am a fairly regular attender at all these types of debates, because I am particularly interested in this problem.

In answer to a question which I put recently, the right hon. Gentleman answered that there was a long-range strike and reconnaissance requirement for this aircraft. However, I can look at a map as well as the next man and I still cannot see any purpose for this aircraft which will cost us an enormous amount of money, particularly in view of our diminishing commitments east of Suez.

I meant to mention in passing our agreement with Singapore and Malaysia which is at least important for the next few years to come while we phase out of that particular area.

Turning to our fourth alliance, which is perhaps the most important of all, I have often been asked what is the Liberal attitude to negotiations on the future of the North Atlantic Treaty Organisation when they fall due in 1969. This is a rather inaccurate interpretation of the terms of the North Atlantic Treaty, because what it says in Article 13 is that after the Treaty has been in force for 20 years—which will be in April, 1969— … any party may cease to be a party one year after its notice of denunciation has been given. I want to make it quite clear where the Liberal Party stand on this matter. We are aiming—not only Liberals, but many others, I hope—for a united Europe, freely co-operating in the economic and political fields—a non-nuclear Europe capable of maintaining its internal security by means perhaps of a European defence force, which force could also be available to the United Nations Organisation for peace-keeping operations outside Europe, but guaranteed against external aggression and nuclear attack by the nuclear superPowers—by a joint Soviet-American agreement.

In these circumstances, the presence of both Russian and American troops on European soil would become superfluous. However, I admit that these aims are still very distant ones. To achieve them will require a great deal of patience and negotiation. It will need tolerance and understanding both by members of N.A.T.O. and by members of the Warsaw Pact.

I believe very strongly that the United Kingdom should start now to try and establish a conciliation committee to bridge the gap between these two military alliances, and then eventually we should be in a much better position to decide whether we should remain as members of N.A.T.O. or seek to discontinue the Treaty.

First, we must ascertain whether the members of the Warsaw Pact are willing to dismantle their organisation if we are willing to dismantle N.A.T.O.; to find out if they are willing to ask for the withdrawal of Soviet troops behind the frontiers of the U.S.S.R. if we are willing to ask for the withdrawal of American troops from Europe; to find out what system of inspection and control they are willing to agree to; to ensure that the terms of any withdrawal are adhered to; and finally to discover if the U.S.A. and the U.S.S.R. are willing to consider favourably the proposition that they should jointly guarantee the integrity of a non-nuclear Europe.

Unless, as a result of such negotiation and discussion, it appears that there is a real likelihood of reciprocal agreement, then I fear that the North Atlantic Treaty, or something like it, and thereby our commitment to the British Army of the Rhine, will have to continue for some years to come. I am certain that the main obstacle to any détente in Europe, and to the type of East-West agreement I have outlined, is the conduct of the war in Vietnam. I may say that the Liberal Party has publicly dissociated itself from the United States policy in Vietnam; but, at the same time, we have proposed a series of actions and initiatives which might get the Americans off the hook. I will not pursue that subject at this moment.

To return to the matter of nuclear weapons in Europe and the aim of a non-nuclear Europe jointly guaranteed by the super-Powers, this is all very relevant to the cost of defence. It seems that we find ourselves in a position of trying to preserve the complete farce of an independent nuclear deterrent committed to N.A.T.O. In my view, if it is possible—and this answers the question of the hon. Member for South Ayrshire (Mr. Emrys Hughes)—we should try to convert the Polaris submarines to hunter killers, if it is not already too late.

I realise that at least two of them have gone beyond this point. I do not know about the third and fourth. In any case, we should arm them with conventional British warheads. We should switch the V-bombers to a conventional bomber-reconnaissance rôle and we should scrap our so-called tactical nuclear weapons. So long as we are members of N.A.T.O. and sitting under the American umbrella there is no case for holding nuclear weapons. Once we have a joint guarantee of Europe by the Russians and the Americans there is no case for a British deterrent on its own. It is not credible, and we should scrap it.

I have talked about the extra commitments that we need for our overseas responsibilities. We already have most of the forces that we need, if we can provide them with greater mobility. We need a fire brigade force which can be switched round the world at a day or two's notice, and not just a strategic reserve, which we should find difficulty in moving rapidly. We do not need the existing bases. We need commandos, commando carriers, paratroops and transport. Above all, we need air support, and to me this means aircraft carriers. It has been made clear in speeches this afternoon that we will have only two fleet carriers left after the "Victorious" and "Hermes" are phased out.

Arising from the various points that I have made there are three main questions. What superfluous forces and weapons do we possess at the moment? What additional forces and weapons do we need? What will be the overall effect on the cost of defence? My arguments are not primarily budgetary. I believe that anybody can make figures prove almost anything. Therefore, I shall keep my figures to simple ones.

First, there are five categories which my party and I regard as superfluous. I have made it clear that I think that the nuclear strategic force—costing approximately £104 million a year to maintain—is superfluous. I think that the forces east of Suez, although they must be phased out over a sensible period—and they are already costing us, gross, £230 million a year—are superfluous. The Polaris submarines are certainly superfluous. It has been made clear by the introduction of the Poseidon missile and the various defences which our possible opponents already possess that the Polaris is obsolete.

Can the Secretary of State tell us the purpose of the guided missile destroyer—the T82? It is only a small thing, costing a mere £20 million, but what is its function and purpose? Finally, I return to the 50 F111K aircraft, at a total cost of about £280 million—an aircraft for which there is no possible strategic purpose, especially in view of our diminishing rôle east of Suez.

Those are what my party regards as being superfluous. Now, what do we regard as being necessary, additional to what we have? The Secretary of State should consider retaining the aircraft carrier "Victorious". He should allow in his defence budgeting for a series of five major aircraft carrier overhauls, spread over the next five or ten years, at a cost of about £30 million each—a total of £150 million. We should also lay down—if we have not already secretly done so—at least an additional ten hunter-killer submarines. I am told that the cost of these is about £29 million each, in which case the total cost would be £290 million.

My arithmetic may be faulty—I have not the same access to figures as members of the Government have—but I make the approximate gross savings arising from my proposals £334 million per annum, with a capital saving of about £230 million. I know that these are gross savings, and that the net savings will be considerably less—perhaps less than half—but they are still rather more than the figure at which the Government are aiming. [Interruption.] I know about the offset agreement.

I want to quote what was said in The Times by its defence correspondent, Mr. Charles Douglas-Home, on 27th February of this year. It is a long article, and I will quote only the last part. It says: The trouble with offset agreements, however, is that they interfere with the normal pattern of business. Who could say that once the tariffs were withdrawn, the British firms would not have won those contracts anyway? The danger of naming a specific target is that the Americans will have every excuse to re-erect their tariff when Britain has exported that amount of military equipment to America, whether or not the orders were due in any way to special governmental persuasion. The offset arrangements certainly made the F111 purchase acceptable to the Cabinet last year when the initial order was placed. Since then Whitehall has been in danger of extolling the offset agreement sometimes almost to the point where the arrangements on their own seemed to justify the purchase of the aircraft. I agree that cuts in defence are necessary, but my hon. Friends and I are by no means convinced that the cuts which are being made are the right ones, and that they have been made at the right time.

7.36 p.m.

Mr. Alan Lee Williams (Hornchurch)

I want to make a brief comment on the speech of the hon. Member for Aberdeenshire, West (Mr. James Davidson), the Liberal spokesman on foreign affairs, in reference to his remarks concerning South-East Asia and, in particular, our commitment to Singapore. He makes an error, as do many of my hon. Friends, in always assuming that the threat to Singapore and Malaysia will be either a Chinese or a Russian threat. One of the great dangers of always being mesmerised by China and Russia is that one overlooks the secondary arms race which is unfortunately going on in South-East Asia and other parts of the world.

Mr. James Davidson

I must make it clear that I am not mesmerised by the Soviet Union and China. I do not believe that either poses a direct threat to this country.

Mr. Williams

I want, first, to congratulate my right hon. Friend upon a continuation of what I consider to be a sensible structural reorganisation of our Services, although I am not sure that the latest cut of £100 million, imposed under the conditions in which it was imposed, necessarily makes it a tidy operation. There are many points of criticism which can be made about the cut. Generally speaking, however, my right hon. Friend has continued to rationalise and streamline our Services.

The ultimate objective is surely to ensure that we have Armed Services which are capable of discharging their obligations in line with our foreign policy. Part of our difficulty, at any rate since the end of the war, has arisen from our lack of clear foreign policy objectives. There is no point in criticising my right hon. Friend for trying to make sense out of a foreign policy which today still lacks clear perception. I have not heard from the right hon. Member for Wolverhampton, South-West (Mr. Powell) or the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) a clear statement of foreign policy objectives on which we can base our defence arrangements, and I do not think that they are in a position to be able to criticise, although they can make a contribution if they will start to think in terms of the mid-20th century.

This is part of our problem. We have defence commitments to N.A.T.O., C.E.N.T.O. and S.E.A.T.O. We have a whole list of treaty obligations besides these solemn defence agreements, some of which will lapse in the fullness of time. But we are still formally committed, and we must therefore see whether we can either re-negotiate or withdraw from existing defence arrangements.

As I said in a previous speech in the House, we cannot undertake all these commitments. We are members of all major defence alliances, and clearly we have not the resources to discharge that kind of responsibility. I accept the view, which is not universally shared by some of my hon. Friends, that in times of peace, if used very carefully, efficient armed forces give a country a diplomatic leverage. There are limitations to that argument, but it is basic to my central argument.

I would argue forcibly that our diplomatic leverage is so much weakened because our capability over the wider field is questioned and I should like to see a much more effective division of labour for the Armed Forces. I take the view that we can make economies and that we could withdraw up to two divisions from Europe.

The amount of saving, as no doubt my right hon. Friend will point out, might make that in itself an expensive operation. I also believe that our defence commitments in the Persian Gulf area are very questionable.

But I do not share the view expressed by some of my hon. Friends and some hon. Members opposite that savings can be made in South-East Asia, which in my opinion remains the most sensitive and dangerous area of the world. No one believes any longer that there is a military threat in Europe, and the kind of threat which exists in the Middle East cannot be solved by British means alone, but in South-East Asia, because of historical connections, we could still play an important rôle up to the middle of 1970s. I have already told my right hon. Friend that in my opinion it was a mistake to name a date in respect of leaving the base in Singapore.

Nevertheless, I do not quarrel with my right hon. Friend's overall objective. It is clear that after the 1970s some regional arrangements must be provided—regional arrangements which, I believe, we can nurture and assist for some time to come. But if we give the impression to people in South-East Asia, and particularly Lee Kuan Yew, that we intend to pull out sooner than we have already indicated, in the middle 1970s, we may create an extremely dangerous situation.

As I said to the Liberal Party spokesman on foreign affairs, the situation in South-East Asia is extremely complicated. This arises not only from the existence of China. Nobody knows where the foreign policy of China will lead or what the Chinese will ultimately try to do. Personally, I do not take an over-pessimistic view about China. But I am convinced that China must be offset by a combination of Asian Powers, and this is where, I believe, Britain can make a sensible, rational contribution which would not be too expensive.

We could provide the stability for Singapore and Malaysia which would enable them eventually to reach a defensive arrangement with India and Indonesia. Those are very significant Powers who in the fullness of time could well offset China. But I will not be taken down the road of arguing about the containment of China. Certainly a Western containment of China is a nonsense. It must be a containment undertaken by Asian Powers.

If military power is a diplomatic leverage in times of peace, we must maintain armed Services. I do not see any of my hon. Friends here who are pacifists, but to those who are not pacifists I would suggest that they must surely accept the argument that if we want decisively to influence events in areas as dangerously as South-East Asia, we must be a power there at least in the rôle of being consulted. This is a point which one can prove time and time again in terms of our own history and the history of others.

I turn to the question of our nuclear capability. This has been raised in the debate mainly on the ground that it is a rather expensive arrangement and that it is doubtful whether, possessing it, we end up at the top table. But the fewer nuclear Powers there are in the world the better, and I have to remind the House that there are at least ten potential nuclear Powers in the world—at least ten Powers with the possibility of developing a nuclear capability. Those Powers could easily fight among themselves. Indeed, two of them, Israel and Egypt, are capable of developing a nuclear capability in spite of the non-proliferation treaty and the obligations under it.

It is therefore a gross over-simplification to argue that Britain alone could make a gesture on the nuclear deterrent which was meaningful. In any case, if I understand our policy, our nuclear deterrent has been merged into N.A.T.O. arrangements. Nothing short of comprehensive and universal disarmament will do.

I am not one of those who believe that Britain can contract out of her solemn obligations which, in my view, are her diplomatic leverage which will enable her to argue not only at the top table but at some lower tables, for example South-East Asia. That ultimately can make us a force for good in the world—a rôle which many of us believe that the country can play even in a decade in which it looks as though our power is very much diminished. I support my right hon. Friend in what I consider to be a rational effort in trying to make defence arrangements in keeping with our national capabilities.

7.48 p.m.

Mr. James Allason (Hemel Hempstead)

I agree with the hon. Member for Hornchurch (Mr. Alan Lee Williams) that Britain still has a world rôle to play and that we cannot cast our commitments aside, retire into a small island and think no more about it.

We are faced with a severe crisis, and it is natural that the forces should be asked to make a contribution in the same way as the rest of us in the nation have to pull in our belts. But cuts in the forces must be justified. Here I want to be fair. The Secretary of State has amply justified the cut of £10 million in unexpected delays in the development of equipment. I am quite prepared to give him that. But the other cuts must be compared with the fact that in July we were told that this was the end of cuts, that we had completed our defence policy and that the forces were just capable of meeting all commitments.

I have had a lifetime connection with the Services and I can claim a longer experience of defence planning than can any other hon. Member. Therefore, I think it right that I should tell the House that I believe that way that the Government have set about these cuts is wrong and that the explanation which the Secretary of State has given is totally inadequate.

Planning is not an exact science. It is really a question of preparing the forces to meet all possible commitments. To do this, it is necessary to achieve early superiority in numbers, equipment and fire-power in any particular operation. In numbers, the forces have already been literally decimated. They are suffering the death of a thousand cuts. Thus, there is no possibility of further saving in numbers and I understand that the Secretary of State does not intend further reductions.

The right hon. Gentleman gave us some details about the £100 million in cuts that he proposes. The £10 million I have already accepted. He gave details of a further £34 million and then left us with a figure of about £60 million for cuts in equipment, buildings and the running down of stocks.

It reminded me of the way people operate in local government. There is a tremendous discussion about the cost of building a bicycle shed, because that is a matter all councillors understand, but when it comes to a really expensive and substantial item it goes through almost on the nod. It seemed to me that the right hon. Gentleman was playing that game today. He gave a certain amount of detail of cuts totalling £34 million and then casually mentioned £60 million in cuts.

The running down of stocks and reductions in the building programme cannot really be a very large item unless they are completely to disrupt the whole programme. A programme of building or of, say, ammunition procurement must be smooth. One cannot to purchase ammunition in one year, cut off the purchase in the next year and then expect to purchase again in the third year at the same prices. It does not work that way. So I suspect that these items are comparatively small and that it is the equipments item which will be the high figure—and that is the one on which we heard significantly little.

Cuts in research and development, again, are very dangerous, since they merely mean that future weapons are delayed and the research does not go into them. This is laying up trouble for the future. Research and development need expansion, because it is disgraceful to send out our forces poorly equipped.

Commitments over the years have been reduced, but that does not necessarily mean to say that one can reduce forces exactly in proportion because one does not allocate a certain number of troops or aircraft or ships to each commitment and then wait until that commitment comes up. One has a whole series of commitments and trusts that not more than a small number of them happen at the same time. Because they have been reduced does not mean that one can rely on fewer of them to happen at the same time. One must still expect a number of them to happen at the same time.

In the past, we have had tremendous success on these unexpected commitments—for example, Kuwait and Borneo. These commitments arose a few years ago and I do not believe that, if such situations arose now, our forces would be able to cope with them. That is a measure of how much damage the Secretary of State has done.

It is extraordinary to imagine just what went on in his mind when he learned of devaluation and the Prime Minister said, "Cut £100 million off defence." What sort of strategic thinking was in the Secretary of State's mind at that time? Clearly, he had not been preparing it for months in advance, because we had the White Paper in July stating the latest course of the Government. This is obviously a panic measure.

In effect, he has said, "We have had a fire in the "Victorious", so let us scrap her. Anything we cannot do by name we will lump together in a large figure and say that we are going to get huge reductions on equipment." What sort of strategic plan has he got now? Apparently, it is a plan which reduces our power in aircraft carriers and at the same time scraps the island base policy.

I accept that cuts have to take place, but Government expenditure on the forces is necessary. Indeed, defence should receive the first priority, but unfortunately, under this Government, cuts in defence services always receive first priority. The right hon. Gentleman is reported to have said last week that the forces—and I did not hear him say it this afternoon—are working to closer margins, involving a risk which would normally be unacceptable.

This is a severe indictment of the Defence Secretary. The Prime Minister is hastening to equip himself for the rôle of toothless bulldog. The Defence Secretary is weeping crocodile tears while that happens. He stands condemned as a gutless Minister who has not stood up for the Services and he should resign.

7.58 p.m.

Mr. Tam Dalyell (West Lothian)

Although from time to time I have had differences with my right hon. Friend the Defence Secretary, I do marvel at the very much greater differences which exist across the Floor of the House. When I listened to the hon. and gallant Member for Wells (Lieut.-Commander Maydon) wanting some strengthening of a soft belly of N.A.T.O. in the Mediterranean, to the hon. Member for Hendon, North (Sir Ian Orr-Ewing) wanting vastly more spending on the "Victorious", to the hon. and gallant Member for Salisbury (Mr. Michael Hamilton) denouncing my right hon. Friend for savage cuts, and to the speech of the hon. Member for Hemel Hempstead (Mr. Allason), I wondered what had happened to the pledges of the Conservative Party to cut Income Tax, because any kind of costing of those speeches would mean, I would think, 6d., [...] or even more on Income Tax. That should be said.

I was also fascinated by the speech of the hon. Member for Aberdeenshire, West (Mr. James Davidson). Some of us were wondering whether he was being spurred on from an extra-Parliamentary source, the Liberal Party executive, and had been told to be more militant.

I want to ask my right hon. Friend one question, raised by the Member for Aberdeenshire, West, about which there has been a great deal of misunderstanding. It concerns the Jungle School of Warfare in Malaysia and any British commitment there is in Thailand. I do not believe that there is much wrong here, as it happens, but for the record I hope that my right hon. Friend can clear this up and say precisely what is the position.

I do not want to be unduly petulant, but I have one immediate issue to take up with the Government and this is about the nature of the debate. My right hon. Friend spoke for 70 minutes and gave us far more information than we ever had from any Tory Secretary of State, and for that I applaud him. But I wonder whether for such a debate, in which many hon. Members want to speak, a statement in point could be given beforehand so that we could perhaps be more informed than we are for this debate, justifying a shorter Front Bench speech.

Secondly, is it right that the Secretary of State, in opening the debate, should say that certain points, such as the effect of devaluation on troops overseas, will be explained by the Minister of State at the end, when we would have hoped that the questions we had raised would be answered? This is a matter of some substance.

Frankly, I am extremely concerned by certain ways of operating inside the Ministry of Defence. This was brought to light this afternoon, when I understood my right hon. Friend to talk of what he had done when he found that the fixed budget to which he had been working had had to be changed because of the matter of delay. After all, if there is to be delay and change, if we find that delay has created room for manoeuvre in expenditure cuts, could not this be taken off the total defence bill rather than finding other tasks for it inside the Ministry? Perhaps that is why some of us have more the characteristics of sea-lions than some of the Government would wish. We suspect still too widespread waste.

The issue which I must raise with my right hon. Friend is how effective he is being in what he calls the ruthless pursuit of value for money. I should like to talk on the ground that my right hon. Friend has chosen for himself the whole question of cost effectiveness, the whole question of value for money. Having been told, very properly, by my right hon. Friend and others in days gone by to go away and do my homework, I have gone away and I have done my homework on two projects, admittedly in a narrow field.

I am in no sense crowing over apparently having been right over the Anglo-French variable geometry aircraft or Aldabra, because it is not a matter of crowing. Very serious issues are involved for the Government and for this party. There are certain points in common in these matters which I find very disturbing, and it might be useful to go over them as a kind of post mortem with a view to having a look at the future and future defence analysis.

The first question pertains to the lack of information on which decisions appear to have been taken. On Aldabra, for example, why was it that someone in the Ministry of Defence did not tell my right hon. Friend that there was a powerful scientific case? The naturalists and even the Royal Society may have been a bit naughty about this but—

Mr. Healey

The Royal Society itself told me. I had the pleasure of having a meeting with Sir Patrick Blackett and many other members of the Royal Society some months ago when they explained their case with almost as much eloquence as my hon. Friend has commanded in the same view.

Mr. Dalyell

Maybe, but at what stage in the decision-making? I understand that that was the meeting at which Professor Blackett started off by saying that he was concerned with the ecology of the environment and my right hon. Friend said that he had to be concerned with the ecology of human beings. Certainly, he gave the impression to the Royal Society that in the early stages decisions had been taken in ignorance that there was a scientific case. If my right hon. Friend says that that was not so, of course I accept it.

I am very glad that my right hon. Friend is here, because he can deny this, but my impression is that in the early stages of the Anglo-French variable geometry project there were certain misapprehensions, and he went on television to say that in variable geometry techniques we were "streets ahead of the Americans". To those of us who knew that the F111 prototypes were winging their way night and day over Texas and the rolling hills of Arkansas—

Mr. Healey

I have never made such a claim and it would have been ludicrous if I had. I may have said that variable geometry was a technique first developed in the United Kingdom. As my hon. Friend will know, one of our national tragedies is that the Government of the day invested no money in it, so that it was the United States which proceeded with this technological development. If my hon. Friend is to make statements like this, I hope that he will make some effort to justify them.

Mr. Dalyell

On this point, certainly it will be only courteous to go into the Library as soon as I have finished speaking. From memory, there is clear reference in a mid-January Guardian.

I question the apparent lack of consultation about Aldabra. It is my understanding, not from Admiral Ritchie himself, that the hydrographer was not consulted in the early stages of the Aldabra project.

Mr. Healey

That is quite untrue. If my hon. Friend is to make statements like this, I wish that he would produce evidence for them, because so far as he has made a series of statements for which there is no evidence whatever and which are directly contrary to the facts.

Mr. Dalyell

The reply to that is that I have information to this effect.

Mr. Healey

It is false information.

Mr. Dalyell

This, of course, shows the disadvantage of Parliament in relation to a powerful and adroit Minister. If anything proves the case for a Select Committee on Defence, it is this kind of argu ment. When I look at the cross-questioning of Senator McLennan and Mr. McNamara in the United States, questioning which I go through in some detail, I wish that we in this country could conduct this kind of dialogue, because it might help the Ministry of Defence and certainly it would help Parliament, the defence correspondents, and the informed public.

I am very glad my right hon. Friend is here, because I would argue that the proposals for both Aldabra and the variable geometry aircraft were preposterously ill planned. The Secretary of State for Defence cannot deny that when I asked what approach had been made to African countries about over-flying rights, the answer was that no approach had been made—this was a Foreign Office answer. If one is to set up a system—Britain, Ascension Island, across Africa to Aldabra—one would be wise to find out beforehand about and prove over-flying rights. There may be an argument about flying the VC10 round the Cape, but my information is that the fuel problems in flying a VC10 around the Cape to Aldabra would be considerable in terms of the load factor.

On the AFVG, it is very clear that the costing of the titanium research was not properly done, and I hold to the argument that the planning of these sophisticated projects was not good and neither was the costing.

I have it from answers given by my right hon. Friend the Minister of Public Building and Works that there was no notion of the costs involved on quarrying in Aldabra through the honeycombed limestone coral. From all the Ministry of Public Building and Works has said, I am convinced that there was no objective costing of the extremely difficult project of quarrying 94 million cubic feet of limestone coral in tricky currents. I am certain that the items which had to go with any kind of staging post were not properly costed and when we get to keeping giant tortoises out of their ancient habitats so that they will not stray on to airfields, then, joking apart, that shows that the planning has not been properly done.

If the Secretary of State wants to knock me down, let him do so, but it is equally true that towards the end of the project, before demise, the estimated costs of the AFVG seem to go up by £50 million every six weeks. I am not sure that I blame the Minister for that, because I do not know how a Secretary of State, however efficient, can counteract misleading technical advice. It raises some extremely difficult questions of Ministerial responsibility.

I must also raise with my right hon. Friend the "double-think" of the rôles for Aldabra. For some Ministers it seemed to be a staging post for the Far East and then for another Minister, notably my hon. Friend the Member for Leeds, South (Mr. Merlyn Rees), it seemed to be regarded as a withdrawal post from the Middle East at an unspecified date, while yet another Minister had said that it had to be understood that it was all about possible intervention in Africa, although I thought that we had forgone any policy of intervention in Central Africa. For future projects, how does the Secretary of State propose to guard against "double-think" in relation to rôles?

Anyhow, precisely what was the purpose involved at Aldabra? I suspect that confusion about purpose is also true of the AFVG project. For some it was a strike aircraft, for others reconnaissance and for others an interceptor—rôles that might be aerodynamically incompatible in the view of some of us.

Then there is the question of arrangements with partners. We have to tighten up on the style of our agreements with partners. Would it be wrong on the AFVG, to accuse the Government of being ill-informed about the activities of Marcel Dassault and his pressure group for the Mirage IIIG? Did I understand the Secretary of State to say that there was American agreement to the Aldabra base? My information from Washington was that extremely powerful people there were very much against the Aldabra base and that it did not need much persuasion on his part to persuade a relieved and thankful Mr. MacNamara about Britain dropping the whole project.

Mr. Healey

The hon. Gentleman has encouraged me to open a dialogue with him and I would be only too glad to do so. On the Mirage IIIG, I am sure that my hon. Friend will accept that I have not the slightest illusion that M. Marcel Dassault had any intention of killing the project as fast as he could. Where I was able to inform the House of something which it possibly did not know was that the French Government had no intention whatever of giving M. Dassault funds to develop the IIIG as an alternative to the AFVG. This is borne out by the fact that M. Messmer announced, in presenting his recent defence estimates, that there was not to be one penny spent on development of the IIIG for the next two years, so that development could not possibly start, such was the French budget, until 1970, and production could not start till 1975.

Mr. Dalyell

Is it not a general truth that Marcel Dassault, like it or not, has rather got his way in the matter of swing-wing aircraft?

Mr. Healey

What is true is that Marcel Dassault has achieved—not by himself, it was achieved by other factors affecting the French Government—the cancellation of the AFVG, but he has not got a French order for the IIIG, which was his objective.

Mr. Dalyell

Well, then, this is another argument for the Select Committee which might be set up. After putting Aldabra under the microscope and looking hard at the AFVG, perhaps I will be forgiven for looking at certain other possible projects. I must emphasise, not just because that formidable debater, the Secretary of State is here, that I am asking questions rather than making implications—

Mr. Deputy Speaker (Sir Eric Fletcher)

Would the hon. Gentleman be good enough to raise his voice? I am having some difficulty in hearing him.

Mr. Dalyell

I trust that my curiosity will be forgiven if I stray in the direction of the "Ark Royal". I understood that this is a project of between £30 million and £40 million, and I am wondering what precisely the rôle of the carrier is to be up to 1976, especially in the context of the new policy. Is such expenditure on such a vulnerable ship worth it?

Mr. Healey

May I suggest that this is an issue on which my hon. Friend might very well consult my hon. Friend the Member for Woolwich, East (Mr. Mayhew)?

Mr. Dalyell

That leads me to another subject upon which I would like to consult the Defence Ministers, and this is the question of Woomera. Frankly, I know very little about Woomera, partly because I have been very unsuccessful in finding out about it. It seeems to raise the whole question of our nuclear delivery capacity and what we have, and at what cost. Just what do we spend at Woomera and why?

It is not my intention to raise questions of nuclear policy, but we are immensely curious about the nuclear hardware, precisely what we are getting and at what cost. It may be that this is classified information, and I am not naïve enough to suppose that a Defence Minister can go around giving people like me classified information unless I were sworn into a Select Committee, where of course I would be extremely honourable.

In the same way I am curious about Aldermaston, and especially so in the light of the Prime Minister's speech at Scarborough, when he said that at Aldermaston various projects were under way, ready to beat military hardware into plough-shares and pruning hooks, and the rest of it. This was quite a serious point that he raised—that help would be given to provide equipment for thalidomide children and that Aldermaston was the example of how advanced research could be turned into civil research. I want to know what progress the Government are making in such matters. Can we claim progress in using defence research for civil purposes on any scale?

Is it true that, should we need a fifty-first F111, it would cost £6 million? As my right hon. Friend knows, I had an interview with Senator McLennan when I was in Washington in June, and ever since then I have been sent his Committee's reports. Reading through the reports I am not sure, to be honest, because of the deletions, of what is going on. Without seeing the secret evidence, which is not available to British Members of Parliament, I cannot see how one can come to a judgment. Is it a fact that if we did need, through a crash or wear and tear, or any other reason, another F111, that we are likely to have to spend £6 million per aircraft?

Mr. Healey

I have not the slightest intention of buying any more F111s, but my hon. Friend's question draws attention to the fact that I have got a better bargain in the fixed price on the F111, which now includes a supplementary ceiling, than probably any Government have ever got on an aircraft purchase in the history of warfare.

Mr. Dalyell

I would accept that the bargain that my hon. Friend has been able to make is certainly an extremely good one in these terms. Assuming that the bargain was necessary in the first place he ought to be congratulated on his bargaining.

As always, it is also my purpose to be constructive. I hope that in the rundown as much as possible will be done, not only financially but in every other direction to help the personnel of the forces. Unlike most M.P.s I have taken the trouble to go on a great many military visits in this country. I have been to places like Hendon, the R.A.F. supply centre, and am very well aware of the real and genuine problems facing these personnel. I hope that the transition, to teaching or industrial work or whatever it is, will be facilitated as much as possible by the Government. I accept that any Government has an obligation to people in the Services.

My second question is to do with the White Paper, put forward some months ago by my right hon. Friend. Many of us welcomed paragraphs 40 and 41 which dealt with the possibility of using military personnel in the country for major civil projects. Something has been done in the North of Scotland and perhaps my hon. Friend who is responsible for Administration would say how far this particular project has gone. I am simply progress-chasing the Defence Secretary's idea of using military personnel for civilian tasks.

May I return to Aldabra? Having made this decision—I hope for all time—there are some of us who will not forget Aldabra and who hope very much that some thousands of pounds, some modest sum, will be spent to help the oceanographers and others to develop their research station there. I have letters from the Fauna Preservation Society and from the University of Cambridge, both of which think that £50,000, at some time, could be diverted to this kind of service.

Mr. Healey

Much as I appreciate my hon. Friend's disappointment when I shot his fox, I cannot undertake that any help given to scientists to pursue their researches on Aldabra will be borne on my Vote.

Mr. Dalyell

What is this about a fox? I am sure that it will not be, but what about the D.E.S.?

The Navy, the men of "Vidal", have a great deal of good will and I hope that they and other naval units will be used more and more for marine science, marine work and the development of oceanographic environment. Week after week I have tried to raise the subject of development of the marine sciences in an Adjournment debate, where it belongs more appropriately than to tonight, when other hon. Gentlemen are wishing to speak.

8.20 p.m.

Rear-Admiral Morgan Giles (Winchester)

I hope that the hon. Member for Aldabra—the hon. Member for West Lothian (Mr. Dalyell)—will excuse me if I do not attempt to take up the points which he raised.

I should like to refer to the speech of the hon. Member for Hornchurch (Mr. Alan Lee Williams). I strongly agreed with the points which he made about the moral responsibilities which Britain still has in South-East Asia. The House listened to a most interesting and sincere speech by a man who knows South-East Asia and who has taken the trouble to go to that part of the world to see for himself, which distinguishes it from some other speeches made in the House. The House will also have listened to the speech of the hon. Member for Woolwich, East (Mr. Mayhew) with great interest. It could be summed up by saying that he accused his own Front Bench of having a defence policy which was in a shambles. I agree very much with his diagnosis but not, unfortunately, with his remedies.

It cannot be said too often that defence is the first responsibility for any Government. Historically, it is the only excuse for having a Government and levying any taxes at all. Certainly none of the other functions which modern Governments seek to carry out would be of any benefit to the citizens of our country if the defence of the country and the country's interests were not assured first and foremost.

I agree with the strictures of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) about the savings which the Government are trying to make and the way in which they are loaded five times as heavily on the back of the Services as they are on other Departments of Government. I should like to quote from an official document which has come into my hands: But it is no good for Britain to trim the Forces simply on the basis of some financial figure; they must still be capable of doing what is needed. That comes from an explanatory memorandum issued to the lower deck and all personnel serving in ships explaining the July Defence White Paper. When one contrasts a reassuring statement of that nature with the deeds of the Government, it is astonishing to hear the Secretary of State talking about keeping faith with the Services.

The Secretary of State spoke about additional risks which he admitted his policy would imply, and I want for a moment to look at the threats. The first is the threat of nuclear war. I warmly congratulate the Secretary of State on retaining the independent nuclear deterrent. In view of the history of that force politically, it is a very brave and splendid thing that he has done. The concept of the independent nuclear deterrent is still absolutely valid.

Secondly, as regards conventional threats—unlikely perhaps, but still possible—I suggest that it is extremely important that the Government do not rely entirely on the nuclear hypothesis in Europe. To take the naval aspects of the conventional threat alone, as one of my hon. Friends pointed out, the Soviet Navy has 400 or 500 submarines in commission—ten times as many as Hitler had to start World War II. We must realise how extremely vulnerable Britain is to the submarine. The history of both world wars surely has taught us this. In peace as in war, 2½ million tons of imports a week reach this country, mostly by ship. Surely the famous remarks of the Prime Minister at Plymouth, which have been quoted today, emphasise this point. Therefore, how can it be right to impose further cuts on the Services? The maritime strategy of the Russians has been referred to by various hon. Members. Is it the right time to cut to the bone the forces which might—only might, but, nevertheless, just possibly might—be needed to look after our Merchant Navy?

I should like to refer to the sinking of the Israeli destroyed "Eilat", which I suggest raises a new dimension in naval warfare. I am convinced that the lesson of this event is not to dash off and spend money trying to develop, far too late, surface-to-surface missiles for the Royal Navy. The lesson of the "Eilat" is the importance of aircraft carriers.

Fifteen years ago or more, Naval Intelligence knew perfectly well that the Russians were developing surface-to-surface missiles for use at sea. A conscious decision was taken not to follow them down that road but to use the aircraft carriers. Aircraft carriers are far better than any surface-to-surface missile could ever be in meeting this threat, because a man from an aircraft carrier can fly over any vessel which is detected and identify it positively with what is called a Mark I Eyeball. This is especially true in the context of what one might call the cold war, where an extremely difficult command decision will have to be taken by the captain of a ship who has only surface-to-surface missiles and no positive identification of what may be a hostile ship or just a passing P. & O. liner.

Mr. Reynolds

In view of this decision, which the hon. and gallant Gentleman obviously thinks was right, would he explain why action was not taken to start building these carriers and how many he thinks it would take to match all the sea-to-sea equipped motor torpedo boats?

Rear-Admiral Morgan Giles

The CVA01 was an extremely good start and would have maintained the morale of the Fleet Air Arm, which is the essential part of any organisation.

Mr. Reynolds

The CVA01 was not started.

Rear-Admiral Morgan Giles

The CVA01 would have been and should have been started. A lot of work on it was done by the Conservative Government and was cancelled by the Labour Government, which will turn out to be a disastrous decision. The Secretary of State has never justified the decision to cancel the aircraft carrier programme. He has never adequately, or even courteously, replied to those who have urged him to go for, not smaller, but simpler aircraft carriers. Instead of this, we have had talk about helicopters armed with the AS12 missile.

I should like to ask the Minister this specific question, and I hope that he will give me an answer to it when he winds up: how does the speed of, say, a Wessex helicopter compare with the speed of the Swordfish aircraft which were sent out to attack the "Scharnhorst" in 1942? I am sure that he will be able to obtain that information, and I hope that he will give it to the House when he replies.

Also on the subject of aircraft carriers, I repeat what so many hon. Members have said: that we should not scrap H.M.S. "Victorious" now. It can only be a doctrinaire decision to scrap her, on the same lines as the disastrous decision to scrap the jigs and the tools for the TSR2. It is clear that when we have such a small force of aircraft carriers, we must not play ducks and drakes with any which might be available for reserve.

It is well known that the "Victorious" decision got the Government off the hook about finding enough men to man her. I would like to quote the following paragraph from the same leaflet which was issued to naval personnel: The sea covers three-quarters of the globe and most of it is free from the sort of political trouble we meet over land bases. The Navy can go almost anywhere and exert a stabilising influence without having to fire any guns or drop any bombs. We can move about worldwide by and large without anyone being able to accuse us of aggressive intentions; and so a maritime presence to maintain a British influence overseas inevitably looms large in the forces envisaged in the White Paper. That is the sort of stuff which is put out to the men whose loyalties are engaged in the Service, and yet the Government, in defiance of the whole spirit of that paragraph, are telling the men to do the exact opposite by not providing them with the equipment which, everybody knows, they need to carry out the tasks which lie ahead of them.

Is it not astonishing to hear the Secretary of State, in that sort of context, talking about keeping faith with the Service men and allies? I do not want to say anything to make the situation worse than it is, but is it really surprising that re-engagement and recruiting are so bad when the Government's deeds are so different from their words?

Also on the subject of manpower, of which we are very short, could the Minister say something about the size of headquarters? I am told that 27 paper exercises are going on inside the Ministry of Defence for various combinations of cuts. Perhaps it is hardly surprising that the Secretary of State in another context referred to his staff bursting into tears. The figures given in the breakdown at the end of the White Paper are £59 million for the Whitehall headquarters and about another £93 million for local administration.

What I regard as the greatest danger in the world and the greatest task which our forces have to combat is what might be called subversion of the world by militant Communism. This risk was extremely well described by the late President Kennedy when he called it the risk of being nibbled to death in conditions of the nuclear stalemate. The risk of that danger is a new dimension of war. It applies in the most vivid form and its greatest threat to peace is in the Far East. One thing that Western man must understand about Eastern man is how close to the surface is fear in under-developed countries, where law and order does not occur naturally as we have come through hundreds of years to expect it to do in England.

Intimidation is an extremely nasty thing for a villager in, say, South Vietnam to be faced with. Intimidation explains why peaceful villagers who would much rather be planting rice round their huts in South Vietnam turn themselves into the Vietcong because they are terrified by the Communists into doing their dirty work for them. That danger was extremely well summed up by the Australian defence review, which stated recently that it was essential for the States of South-East Asia to have the assurance of strong friends so that they could gain time to allow their economic systems to evolve and their political systems to develop in the way we all wish to see.

Surely the solution to this difficulty is some sort of Asian security system such as that suggested in the past by my right hon. Friend the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) and others, an Asian security system but essentially underwritten by Western arms. Clearly, it is no good setting up such an Asian security system unless we underwrite it. We cannot underwrite it in the context of the decision to cut our losses and to abandon all our moral obligations and come home from the Far East.

Not only did the Government decide to withdraw from the Far East, but they announced their withdrawal many years in advance. They do not seem to have learned the lesson from Aden of how catastrophic it is to announce in advance when they propose to withdraw from a base overseas. Certainly in Aden it led to perhaps the bitterest humiliation in the many hundreds of years of this country's history.

It is often said that militant Communism such as I have described cannot be defeated by military means alone, and, of course, that is absolutely true. Everybody who has seen countries against which this sort of attack is being mounted understands this perfectly well. I certainly agree that we cannot defeat militant Communism by military means alone, and I also agree that it is absolutely our moral duty in developed countries such as ours to give all the economic aid we can possibly afford to those countries. Again, one has only to see them to know how urgent this need is, and both these things are extremely well understood by the Americans in Vietnam. I have recently referred in the House to the excellent work which is being done in the children's hospital in Saigon by a British team under Dr. Apley of Bristol.

A splendid thing it is to see this kind of contribution which is being made by us, but all this sort of assistance, and all this economic aid which everyone would like to see given to help those emergent countries in their tremendous difficulties, comes to nought unless simultaneously their security is assured, both from internal subversion and from the threat of external attack. This is sometimes summed up as freedom from fear, freedom from want, and freedom from disease, but this triumvirate, this three-legged policy, is useless unless freedom from fear is positively guaranteed.

I would quote from the Defence Review on this subject of the use of British Forces in peace keeping: Britain's forces outside Europe can help to reduce this danger"— that is, of subversion. Recent experience in Africa and elsewhere has shown that our policy of giving rapid help to friendly governments, with even small British forces, can prevent large-scale catastrophes. In some parts of the world, the visible presence of British forces by itself is a deterrent to local conflict. Then it ends on an extremely striking note: No country with a sense of international responsibility would surrender this position without good reason, unless it was satisfied that others could, and would, assume a similar role. And yet. with that ringing in the ears of the House and the country, the Secretary of State has now issued new instructions to his Ministry that no equipment is to be purchased at all if it is solely for use overseas; all equipment has to have a dual rôle, and if it is not capable of being used in Europe, if it is specialised equipment for use in tropical countries, it is not to be ordered.

When the Secretary of State was winding up his speech he paid tribute to the work which our forces have done and are doing around the world. I am sure that every Member of this House would join him in the tribute which he paid. Very well deserved it is. He omitted, however, a tribute to the way in which they withstand the overstretch which the policy of this Government and these cuts which he is making impose upon Servicemen.

I see the Under-Secretary of State for Defence for the Royal Navy nodding on this subject of overstretch, but he must face it that though his own Prime Minister at that Dispatch Box boasted that overstretch had been removed from the Services, the very reverse is the case. The overstretch is now worse than ever, and every niggling little cut which the Government make makes that overstretch worse and worse, both for the Servicemen themselves and—let us not forget it—for their families.

There is a great deal of talk now in the country about cynicism. The right hon. Gentleman the Chancellor of the Exchequer and others have referred to cynicism. The Secretary of State said this afternoon that we must keep faith with our forces and with our Allies. I am bound to say that, in the context of the Government's defence policy we have heard today, that remark is one of the most cynical I have ever heard, even from the Secretary of State.

8.40 p.m.

Mr. Stanley Orme (Salford, West)

I hope that the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) will not mind if I do not follow him in his argument and train of thought. I think that the only time he and I were on the same side was when we wore British uniform during the last war.

Rear-Admiral Morgan Giles

That is a great deal, is it not?

Mr. Orme

It at least proves that at one time we were both fighting the same enemy.

I come back to the issue of why we are having this debate. It follows the Government's new economic strategy of devaluation. The Opposition asked for the debate because the Government announced that as part of their measures following devaluation £100 million of defence expenditure would be cut. It is vitally important that we should debate this. Some who have spoken have seen this as as occasion for a full-scale debate on the Government's strategy throughout the world. I agree that whatever we do in relation to defence, whether we increase or decrease the expenditure, has an effect on our military capacity.

The detailed figures that my right hon. Friend gave were difficult to follow. It was difficult to discover exactly how much had been cut, particularly when one has to put offset charges alongside real cuts. But when one takes into account offset charges with the increased expenditure resulting from devaluation that will occur outside Britain in increased costs for troops, one comes to a net figure of £65 million. I agree with my hon. Friend the Member for Woolwich, East (Mr. Mayhew), who said that the figure was virtually pulled out of the hat. There was no specific figure other than the fact that the Prime Minister, the Cabinet or somebody said, "We must match the cuts at home. Take £100 million off defence".

When we examine the tortuous explanations by the Minister, they are not very convincing. I do not think that his heart is in the cuts that have taken place, but that is for him to resolve. The central issue is not cost effectiveness. I believe that the present Minister has achieved as much cost effectiveness as any previous Minister. The real argument comes on commitments. That is where the basic expenditure arises however much one trims. As my hon. Friend the Member for Woolwich, East said, if it was possible to take £100 million off now, why was it not possible earlier in the year?

The consequence is that I and many of my hon. Friends, who last week welcomed the fact that the Government had at last moved away from the disastrous strategy of defending the £ at all costs to the detriment at home of full employment and expansion, feel that unless comparable measures are taken to go along with devaluation the effects that will hit the country next year will be unacceptable to the British people. I hear all these arguments about defence here, but when I meet my constituents I cannot find anyone prepared to defend the current type of military expenditure. I am frequently asked why we should be spending £75 million apiece on Polaris submarines and why we have entered into the contracts for the F111K and other American aircraft which collectively will amount to about £1,000 million over 10 years.

That is the sort of question I am continually being asked. Why are we maintaining bases east of Suez with, even now, a reduction in our strength there going into the middle 'seventies or perhaps later? I believe my hon. Friend the Member for Woolwich, East is a little optimistic on that score, because it might be the late 1970s before we see an end to these commitments.

Above all, what present justification is there for Britain to maintain her commitments in Western Germany? The French saw fit to withdraw from a large measure of their commitment when they felt that it was in their interests, and in opposition to N.A.T.O. I cannot see why Britain should go around carrying this can—and we are carrying it. Why should we be spending 6.5 per cent. of our gross national product on defence when the six Common Market countries collectively do not spend more than 4.5 per cent.?

One of our reasons for keeping troops there was that we believed that it would be a sop to the Germans for supporting our E.E.C. application. On this issue my right hon. Friend and I will probably part company, but I must say that, having read on the tape tonight what de Gaulle has said, it looks to me as though it is the end of the road for that application, and that we should not just rethink our European policy but the whole question of a European defence and our present commitment in Western Europe.

To many of us on this side it seems absolutely ludicrous that we should keep troops there at such a heavy cost to the taxpayer—a taxpayer who has suffered privation during a difficult economic period. These commitments should be drastically reduced, and then ended, otherwise we shall never get a reduction in defence expenditure. Japan has been mentioned. Japan is building 300,000-ton tankers, competing on her own initiative in world markets, developing engineering capacity rivalling anything that can be achieved in the rest of the world, even in parts of the United States—and is spending 1.2 per cent. of her gross national product on defence.

My right hon. Friend, in his challenge to us this afternoon, said that every time the fish was thrown to the sea lion, the sea lion came back for more. If only those of us of the Parliamentary Labour Party—of the Left wing, or whatever people may like to call us—had some of the power ascribed to us we would be far happier. The fact is that we do not have that power.

My right hon. Friend—and my hon. Friends on the Front Bench who keep on talking might, if they listened for a change, learn something—used all sorts of means to justify our £300 overseas expenditure. My right hon. Friend said that it was not serious when compared with other forms of Government expenditure, but if we look at the rise in this expenditure over the last 30 years, and this was evidenced in one of the bank reviews by a very good analysis of the sterling crisis—in October, before devaluation—we see that we were minus £18 million gross expenditure on Government account in 1938, but that by 1964–66 it had reached over £450 million—greater than the annual balance of payments deficit. I agree that that includes other forms of Government expenditure, but the kernel is in the main military and defence expenditure.

Mr. Reynolds

indicated dissent.

Mr. Orme

My hon. Friend shakes his head. I wish that he would contradict me if I am wrong. I am not saying that if we removed that expenditure everything would be perfect, but it is one of the basic factors which brings disequilibrium into the economy. Until we make that right other things will not fall into place.

Rear-Admiral Morgan Giles

I am sure that the hon. Member is sincere in saying what he believes, but I totally disagree with him. This is not where economic difficulties come from. We must solve our economic difficulties, but we must also help our friends in the world.

Mr. Orme

This is where the gulf between the hon. and gallant Member and me is so great. Basically the hon. and gallant Member is saying that in 1967 Britain should maintain in a world military rôle and still play a major part in the Far East, the Middle East and Western Europe. I say that is no longer possible. Many of our competitors in Western Europe have been taught this lesson. France was taught a very severe lesson in Indo-China and in Algeria. Germany, from whom we stripped overseas dependencies, also does not face this problem at present.

Rear-Admiral Morgan Giles

I agree that of course those countries are not playing their part and paying their fair share of peace-keeping, but I do not go with the hon. Member in saying that we should drop it and let someone else pick up the task. I do not think we can morally do that.

Mr. Orme

The time has gone when any nation could start peacekeeping for the rest of the world. We have had our fingers burned severely in the Middle East. The Government have taken a courageous decision in relation to Aden and South Arabia. I do not believe that it is any longer possible for Britain or any other nation to be peace-keeping for the rest of the world. The United States has been taught this lesson in South-East Asia.

Last week Mark Arnold Foster said in The Guardian that a secret agreement had been reached with the Americans and the Malaysians in June or July this year that we would maintain troops in Malaysia until the Vietnam war had ended. We are entitled to know whether that is true or not.

Mr. Reynolds

My right hon. Friend the Secretary of State answered that in his speech. My hon. Friend will see that if he reads the speech tomorrow.

Mr. Orme

I do not think the Secretary of State answered it. I was present during the whole of his speech.

This is a very serious question, and it has to be faced. I do not want to deal with the intricacies of the defence issue. I understand many of the problems, for I was a Serviceman for six years. I served in the forces; I admit it was during wartime and not in peacetime. I am concerned about Britain getting her economy straight and getting rid of the disequilibrium which exists. She can do that only if she takes basic measures at home and reduces defence commitments overseas—and much sooner than we are doing at present. Otherwise, we shall be faced with this problem again twelve months, two years, or three years ahead. It is not possible for Britain to maintain this rôle into the 1970s.

Mr. Sydney Silverman (Nelson and Colne)

And to maintain sterling also.

Mr. Orme

We are not able to maintain that at the moment. It is not possible for Britain to continue on this course. What is more, I do not believe the British people want us to try to do so. They want us to make a realistic approach to the world. They do not want us to wash our hands of the problems of the world. Money invested in development would give far greater dividends than that invested in arms and military bases. We have to make the United Nations a viable possibility and see that it becomes the peace-keeping force in the world. It is not possible in this part of the twentieth century for the Americans, the Russians or the British to sail or fly around the world as if they were maintaining a 19th century rôle, or even a rôle appropriate to the 1920s and 1930s.

These cuts only tinker with the problem. Until my right hon. Friends face up to tackling the problem, we shall not see the type of defence budget which is in line with what I believe the British people want. If we do not satisfy their demands, or go some way towards meeting what they desire, particularly following the recent measures, they will pass their verdict on the Government.

Despite all the cries which have come from hon. Members opposite about measures which would virtually increase commitments, it should be remembered that when the Labour Government went out in 1951, primarily because of high defence costs, Churchill said in the House, "We are all Bevanites now", and immediately started reducing the heavy defence expenditure which then existed. True, it escalated afterwards, but immediately, to satisfy public demand, it was reduced. I want to see us end our commitments and once and for all set Britain off on a course which I believe is in the interests of the British people and which, in the ultimate, will serve the peoples of the world.

8.56 p.m.

Sir George Sinclair (Dorking)

After that vigorous speech from the hon. Member for Salford, West (Mr. Orme), I am surprised that he turned up his toes so quickly at the prospect of the dual rôle of fulfilling our responsibilities to our allies and friends and gaining a rising standard of living for our own people at home. There is a simple solution to this, that we in this country should all work very much harder than we have been doing in recent years. Then we should be able to earn a decent standard for our own people and to carry out our real obligations and responsibilities to friends and allies who, in times of our need, came to our help with everything they had.

The Secretary of State for Defence, at the end of his speech, paid a tribute to our Armed Forces. I am sure that he was sincere in doing so. But I wonder how those sentiments will sound to them just after he has announced £100 million worth of cuts in Services expenditure. I wonder how hollow this tribute will ring to Service men today.

These cuts, whatever the Secretary of State may say, will weaken our Forces and undermine their capacity to meet our defence commitments. They will affect the credibility of our armed forces, because they show that the Government behind those Forces have not the will to carry out our commitments and our responsibilities. This is what confidence means—believing in people's will as well as in their resources.

The new and sudden cuts in our defence budget and the further reduction of our forces show how low a priority this Government give to defence—the basic responsibility of any Government. The Secretary of State was at pains to show the Left-wing critics on his own side—there is none here now—[HON. MEMBERS: "Yes."] Very few of them here now; I apologise. He kept on turning to the Left-wing critics on his own side to show how much heavier these cuts were on defence than on other parts of our economy.

The right hon. Gentleman did not, of course, go on to compare these cuts with the rapidly rising expenditure on civil servants and on the indiscriminate expansion of wasteful social services. Yet these Armed Forces are the means by which we make our contribution to the defence of the free world, honour our treaties, discharge our responsibilities to our allies and friends and protect our real interests and assets.

If the Secretary of State feels as strongly as he suggested for the Armed Services—for the way of life they have chosen in the service of their country—then, having accepted these great cuts which are so disproportionate to the cuts elsewhere in the economy, if he wants the Services to believe him, he should resign.

The right hon. Gentleman admitted that he has, by these cuts accepted risks which he would not normally have accepted.

There are special reasons for maintaining our strength in Europe. At a time when N.A.T.O. is being undermined by de Gaulle, our contribution to the forces in Germany should not now be further thinned out, especially at a time when Europeans are judging whether Her Majesty's Government are serious about making a full contribution to the strength of Europe.

Elsewhere, there are serious threats to peace—in areas where we, our allies and our interests are deeply involved; in Cyprus, in the Arab-Israeli dispute, in Aden, in the Persian Gulf, in India—which was recently invaded by China and which )s still under threat—and, beyond there, in the Far East.

The Secretary of State paid tribute to our forces in Malaysia and Singapore for defeating Indonesian attacks. The record of our effort there since the war, in checking infiltration in Malaysia, in Korea and in confrontation with Indonesia, is a story of great success. It is greatly valued by the people of the area, by whose side we fought those campaigns. There is a high degree of acceptance in that area of our effort and presence. Two of these were peoples' wars in which we were fighting along side local people. We should not get out of that area while there is a risk, by infiltration or subversion, to their stability and their capacity later to form their own regional defence organisations.

Mr. G. Campbell

Does my hon. Friend agree that the question now is whether we would be able to provide enough forces—as we were able to do before—if confrontation occurred in a year or so from now?

Sir G. Sinclair

I do not believe, as a consequence of the cuts announced in the Defence Review, the decision to get out in 1975, and the consequences of the cuts in expenditure announced today, that we will be left with forces that will be credible in the area in future. Australia and New Zealand made it clear, when their representatives were here, that they wanted us to remain on the ground as a credible force. They wanted us to continue until the countries of the area could create an effective regional defence arrangement.

This is bound to take time and many of those countries are not yet in a position to build up strong forces. I am not referring to Malaysia and Singapore, but to some of the countries with which they will have to be allied in the area. Until then, we must discharge our responsibilities there. We have been with these people for a long time. They understand us and they have been relying on us.

These new cuts are bound to affect our programme of withdrawal from Malaysia and Singapore. It was a shameful retreat from our responsibilities when, in the Defence Review, the Secretary of State announced that we would withdraw completely from the area by 1975. This is bound to make everybody in the area look over his shoulder to see who would be on his side when the storm began.

Yet both Australia and New Zealand had strongly urged us not to commit ourselves to a rigid programme. And now, in place of our forces on the ground, the Secretary of State promises some mobile task force. But we will not have carriers and it seems that we will not have staging posts to make the prospect of such a force credible. All this is at a time when Australia and New Zealand are engaged in Vietnam in what they believe to be fighting for the safety of the area and for the survival in freedom of their own countries.

Our best service to Australia, New Zealand, Malaya and Singapore would be to retain a credible force on the ground in this area. How short memories are! Does this Government forget what Australia and New Zealand did to help us in two wars—how they came to Europe and to the Middle East. When the Government retreat from their responsibilities in this way in the Far East, we can understand why respect for Britain among our friends and allies in this area is being undermined. And the Government opposite are responsible. For me, as for many people in our country, the saddest result of all this is the reaction of Australians and New Zealanders to this Government's determination at all costs to pull out of the Far East before our allies or friends there are ready to provide for their own defence.

I would ask the Defence Secretary two questions. First, he laid great emphasis on the cost of bringing troops home and housing them. Does this mean that he will shortly be announcing further cuts in the manpower of all three Services and disbanding additional units? Secondly, how does he hope to retain a credible mobile force in the Far East with only two carriers and without proper staging posts? The hon. Gentleman the Member for Woolwich, East (Mr. Mayhew) made it clear that such a policy was a nonsense.

Finally, I would add my plea to the strong case made by my hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing) that, while the threats to peace in the Far East and elsewhere are still so great and widespread, the Defence Secretary should postpone scrapping "Victorious", and, having made good the recent damage, should keep her in reserve. That, at any rate, would preserve a small but credible carrier force until a change of Government makes it possible to revitalise the carrier strength of the Royal Navy, which is the key to the mobile conventional forces that we shall need for many years to come.

9.8 p.m.

Mr. James Ramsden (Harrogate)

We should all endorse what the Secretary of State for Defence said at the beginning and end of his speech by way of tribute to members of the Armed Services, to their work and to the qualities which they display in doing their work. One of the reasons why it is nice to be back in debates on this subject is that their content is to do with members of the Armed Services, and their affairs are very agreeable affairs with which to have to deal. I also thank the right hon. Gentleman for his reference to me.

Having said that, I must proceed to some strictures upon what he said. He took my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) to task for having at one stage been a textual critic. I have heard him do this before. Applying a little textual criticism to the speech of the right hon. Gentleman, I thought that the beginning and the end of it belonged to a rather different work—that is, the business which we took formally before this debate—and that the middle was an interpolation of a rather more recent date mainly for the benefit of hon. Members on his side of the House below the Gangway.

This debate has been a remarkably four-cornered kind of affair, taken part in by the Government, the official Opposition, a strong contingent to whom the Secretary of State referred to as the sealions, and, fourthly, a small but distinguished "cave" comprised of the right hon. Member for Woolwich, East (Mr. Mayhew) and the hon. Member for Bosworth (Mr. Wyatt).

It is fair to remind the House that the debate has been about devaluation and its consequences for the Armed Services. In a real sense it has been a continuation of last week's debate. It has been about the consequences of last week's decision upon Her Majesty's Government's defence budgeting, and about the realities behind those figures in terms of the equipment, the dispositions, the efficiency and the morale of the Services.

It was necessary that we should have this debate, because the Secretary of State had not been able until today to make any statement to the House. The right hon. Gentleman will agree that on these occasions it is normally more convenient for the House to have a previous statement or, at any rate, a document, before it has to deal with figures of the complexity which the right hon. Gentleman had to put before us today. However, the right hon. Gentleman gave us fairly full information, and I want to spend a little time assessing what he told us and what he did not tell us.

First, I want to refer to the question of the restoration of the value of their overseas allowances for our personnel stationed abroad. I understand that the Minister of Defence for Administration will cover this point in full. I hope that he will, and that he will not go too fast while doing so, because it is important. As it happened, I had a letter today from a constituent who had no prior knowledge that I should be intervening in the debate today, and it puts the point very well. The letter says: I have a friend serving in Norway, which has not devalued, with the result that he will suffer a substantial drop in pay unless the Ministry of Defence corrects the deficiency by making good the 14.3 per cent. reduction in the value of the £. It seems extraordinary that there should be this doubt. All it requires is an explicit statement from the Government that such personnel will not suffer financially from the fortuitous fact that they happen to be serving in a country which has not devalued. That puts the matter in a nutshell. I hope that the hon. Gentleman can give the House an explicit assurance.

Mr. Reynolds

indicated assent.

Mr. Ramsden

If the hon. Gentleman is still engaged in negotiations with the Treasury I hope that he will bear in mind the fact that we have had it on the authority of the Prime Minister that the £ in our pockets has not gone down in value. Those in the Services abroad want to be satisfied that the same applies to them. They want the equivalent value in foreign currency.

The Secretary of State did not answer my right hon. Friend's question whether N.A.T.O. had agreed to the withdrawal of a brigade from B.A.O.R., which was notified to it earlier this year. Moreover, we had no assurance—I am sure that this was an oversight on the part of the right hon. Gentleman—that the Territorial Army will not be touched further or tampered with as a result of this latest round of decisions.

On the relationship between the size of the cut in defence—the £100 million—and the total cut, which my right hon. Friend pointed out had been heavily slanted against the interests of the defence Services, the point is that when the Secretary of State talks about a civil cut of £300 million he is ignoring the fact that £200 million of that is accounted for by two extraneous factors—the abolition of the payment of premiums on S.E.T. and of the rebates to exporters. which account, between them, for £200 million. Therefore, the equation established by my right hon. Friend of a £100 million cut on defence and a £100 million cut on civil expenditure is perfectly valid, and he was right, and so was my hon. Friend the Member for Dorking (Sir G. Sinclair), that this is a slant very much to the disadvantage of defence and the Services.

I have one or two comments and questions about the composition of the £100 million cut. My hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing) asked why the Government should scrap the "Victorious" now and why they should not put it in mothballs and treat the resultant expense as a worthwhile insurance premium in case of emergency. The announcement of the scrapping seemed a little precipitate, and the House would welcome amplification of the Secretary of State's reasons for announcing that it would take place so soon.

We should be told now what the figure for the 1968–69 Estimates is upon which this cut is to be superimposed. The Secretary of State said that it could not be given. I do not believe that; I think it can. I recollect that this is the season of the year when the Departments embark on their examination of the Estimates, and, although these may not he in precise form, I cannot believe that it would be impossible or undesirable for any reason to give the figure.

Mr. Healey

I hoped I made it clear in my opening speech. It is about £2,000 million at 1964 prices.

Mr. Ramsden

I think that the House would be interested in the figure, and if there is no reason why it should not be given I hope that it will be given.

On the increase in foreign exchange costs, about which the hon. Member for Bosworth intervened once or twice, we understand from the Secretary of State that the increase could be as high as £50 million or as low as £35 million—if I have got his figures correctly. Whatever figure turns out to be right, it none the less represents a failure, as one of the consequences of devaluation, in the Government's aim in cutting the cost of defence expenditure in terms of overseas currency and foreign exchange. The aim was explicitly stated in paragraph 3 of the 1966 Defence Review. This is yet another failure, as a consequence of devaluation, and it is to be noted that we are that much further away from achieving the famous Healey £100 million of 1967.

We were given comparatively few details of the £60 million worth of, as described by the Secretary of State, "minor cuts and deferments", and if more can be told about the composition of that figure I hope that will be done. If it is undesirable for it to be revealed I will not press for it, but I think that a little more could be said. After all, it is more than half the content of the whole cut. I say the same thing about the figure which represents the Government's hope that it will be possible to shift resources out of effort on research and development into civilian activities of this kind. We should like to know a little more about the programmes that it is intended to cancel or postpone.

I also want to say a word about the Government's intentions with regard to research and development programmes. We had an excellent speech on this by my hon. Friend the Member for Salisbury (Mr. Michael Hamilton). I hope that the Government will be successful in this transfer of resources. From my recollection, establishments of this kind—the Royal Ordnance factories, and so on—will, understandably, hang on like grim death to as many people as they can because they know that programmes will come on again, that the work will be there and that they will need people to carry it out. The Government will have to watch it if any good is to come from this cut.

I now turn to the effect of what we have been discussing on the Services themselves. When all is said and done, when we have done our arithmetic and agreed or disagreed about the figures, what counts is the effect it will all have on the men and women in the Armed Forces. One cannot escape from the conclusion that, because of devaluation, as a result of the failure of other Government policies, the men and women in the Services are to get £100 million less provision this next year than they should be getting. That is the point and it has been well made in almost every speech by my right hon. and hon. Friends.

What ever dispute there may be about the cuts announced as a result of devaluation, it cannot be disputed that they will strike another blow at the capacity of the forces to do whatever job may come their way. The right hon. Gentleman said that they would be operating at a lower level of equipment and stocks. None of us knows what may come the way of our forces. The right hon. Gentleman said he took comfort from the fact that, in the last three years, his predictions had come out right.

I cannot help remembering that the classic instance of this sort of remark by a high military authority was when General MacArthur said that the boys would be home by Christmas. The following week, the Chinese Army was across the Yalu river and the Korean war went on for many more years. It is not wise and gives a great hostage to fortune to make that sort of prediction. If what the right hon. Gentleman said here today, and what we understand he said on television means anything, it means that the forces have been brought to a situation of overstretch.

The right hon. Gentleman said that his predictions had come out right. We might have retorted, when at the beginning of his term of office, he said he had found the forces overstretched, that our predictions had come out right. So they had. We had got through. But the difference between the situation we were then in and the situation with which the right hon. Gentleman has confronted our Armed Forces is that, in our time, they were stretched through the exigencies of hostile operations and the activities of our enemies. Now the stretch, if stretch there be, comes from the failure of the Government so to manage the finances of the country that our forces have the equipment and stocks and backing they need.

The Secretary of State was reported in The Guardian to have said that, in many areas, we shall be operating on narrow margins and that, in normal circumstances, this would have meant an unacceptable risk. No doubt this statement will get great currency in Service circles. I can only hope that this weekend they did not see the headline in the Observer, "Labour's best week—Crossman" with below, the words: I reckon this has been the best week for the Government at Westminster for many months". The House should recall the background to this latest £100 million cut, if only in sympathy with the interests of the members of the Services themselves. These changes are noted by the Services. I was struck by a quotation of my hon. and gallant friend the Member for Winchester (Rear-Admiral Morgan Giles) of an explanation of a Government decision which had been circulated for reading on the lower deck. These debates of ours are followed and their significance is appreciated.

The background to these latest cuts is the measures announced by the Secretary of State in July, the reductions in Army manpower, the more rapid phasing-out of the carriers, the cuts in research and development, which we have had again today, and the reduction of front-line aircraft for the R.A.F. Even after effecting these cuts, the Secretary of State felt able to say: The Royal Navy, the Army and the R.A.F., though reduced in size, will be capable of meeting all the demands that may be made upon them. According to The Times last week he assured Britain's allies and the Services that the July defence review would be the last major change in defence policy during the life of this Parliament. On top of all this, we have these further reductions and we understand that the Secretary of State no longer feels able to voice without qualification his confidence in the capacity of our forces to meet all the demands which may be made upon them.

This is a depressing situation. In an admittedly not long experience, but having studied these things over a certain time, I cannot recall any other Secretary of State in our political history having been driven to an admission of this kind. The House must surely ask itself what we are to make of it when we are brought to this sort of situation, what the Services are to make of it and what our allies are to make of it.

Nobody, least of all anybody who has had direct experience, underestimates the difficulties and the problems of defence which face a Government. The premium which has to be paid for complete insurance against any contingency is impossibly big and the resources available are relatively small. None the less, successive Governments, going back to the war, and successive Ministers of Defence have managed somehow to pick their way through the pitfalls, to contrive solutions and to come up with an answer which on the whole has seemed to sensible people to make sense and to be acceptable, and which by and large has worked in practice. We cannot say the same today.

In a forceful speech which I am sorry to have missed in part, the hon. Member for Woolwich, East put this very well. I quote the hon. Gentleman—for two years the Cabinet's handling of defence has been "chronically unstable" and the "Government's defence planning has been a shambles," and everybody in the Services knows it, from the Chief of Staff downwards.

Why are we faced with this dilemma? The hon. Member for South Ayrshire (Mr. Emrys Hughes) made a genuine speech and a somewhat similar point of view was expressed by his hon. Friend the Member for Salford, West (Mr. Orme). As today I re-read the Supplementary Statement on Defence Policy of last July my eye was caught by this sentence: …we may wish to carry out the programme of reduction and redeployment either more slowly or more quickly according to political or economic need. That is the sort of phrase that, on publication, in the context of sensational Government measures, tends to pass unnoticed, but which may later strike one as being vivid, appropriate and apposite. …more quickly, according to political or economic need. Well, "politically"—I wonder. No one who contemplates dispassionately the record of this Government on defence, culminating in this latest cut, can fail to be vividly aware that ever since 1951 whether in opposition or in government, this question of the right allocation of resources as between civilian expenditure and defence expenditure has been hanging over the head of the party opposite like the Sword of Damocles and it is hanging over them still.

In 1951 the party opposite split on this question. It was not immediately electorally fatal, but eventually it proved so. My own view of the present state of defence politics is that the party opposite will move heaven and earth not to split again over the same question. There is this new factor in the present situation, and it is new since the last election, that whereas, in 1951, those at the head of the party opposite were not only prepared to put the interests of the forces first, and the national interest first, but they also had the Parliamentary support necessary to do this.

It is a fact of the present political situation that this is now no longer the case. The hon. Member for Salford, West under-rated the power of his hon. Friends, sitting where they do. I find a quotation in the Daily Telegraph by his hon. Friend the Member for Liverpool, Walton (Mr. Heffer) which says: The Left does not know when it has won a victory. The hon. Gentleman under-estimates the power that he and those who sit beside him have exercised, and do exercise, in the formulation of policy today.

Mr. Mendelson

I have watched with interest last week how the Opposition had decided to build up my right hon. Friend the Chancellor into Prime Minister. Are they to top that now by building up the Left against the rest of the party?

Mr. Ramsden

I have no such sinister design. I can recall seeing a comment by one member of the party opposite that those on the Left are such natural intriguers that they will believe anything. They must credit me with innocence in this respect.

There is an underlying seriousness about this and I genuinely mean what I have said. My hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing) quoted a phrase from one of the Labour Party's "Talking Points" earlier this year, which said: Resources have been switched from defence to social services, which is the right priority for a Socialist Government. That won a cheer. That is the point; it got a cheer. The country is now seeing the results of the hon. Gentleman and his hon. Friends. The results are to be seen in this latest round of defence reduction. We on this side of the House are determined that the country should see and understand the reason why.

9.35 p.m.

The Minister of Defence for Administration (Mr. G. W. Reynolds)

This has been an interesting debate, not least probably because I can now reverse the argument which the right hon. Member for Harrogate (Mr. Ramsden) has been using for the last few moments. He said that the Labour Party would move heaven and earth not to split again on defence. I do not think that there is a danger of our splitting again on defence. The vast majority of my hon. and right hon. Friends support a policy which will keep our commitments entered into over a long time while we try to get them reorganised in the light of current circumstances in the middle of the twentieth century.

On the other hand, there is bound to be a group of my hon. Friends below the Gangway—there always has been—who will press us to go further. I do not object to that. We sometimes have to justify what we do to the Opposition. It is helpful to know that we have to attempt to justify it to an unofficial opposition also. The same position can be said to exist on the other side of the House.

We are debating what I was led to believe by the newspapers over the weekend and by statements of hon. Members would be a very important subject on which the safety of this country depended. We are debating it on a Motion for the Adjournment. For most of the time, there have been only six hon. Members opposite present—[HON. MEMBERS: "Oh."] I have been sitting here counting them. I understand that we are not to have a vote. This is probably because it would be difficult for hon. Members opposite to frame a Motion which could be supported by every hon. Member opposite. There would have been those who did not wish to vote and say that we should change our east of Suez policy, there would have been those who would wish to vote for a Motion the other way, and there would have been the right hon. Member for Wolverhampton, South-West (Mr. Powell) right in the middle.

Mr. Powell

The hon. Gentleman has overlooked the fact that, as his right hon. Friend the Secretary of State agreed, this debate had to take place in the absence of a detailed statement from the Government.

Mr. Reynolds

A statement was made by the Prime Minister to the effect that the £100 million saving would be made with a number of the major points involved. I hardly think—

Mr. Douglas Dodds-Parker (Cheltenham)

On a point of order. Is it in order for the Minister to contradict what the Secretary of State told us at the beginning of the debate? He thanked the Opposition for allowing this debate to take place.

Mr. Deputy Speaker

The Minister can make his speech in his own way.

Mr. Reynolds

Thank you, Mr. Deputy Speaker.

This has been an unusual debate. The right hon. Member for Wolverhampton, South-West began by saying—he was prodding more than anything else—that he would pose a number of questions, which he did. Other hon. Members raised other points. I intend to try to answer as many of the points as I can.

My hon. Friend the Member for Woolwich, East (Mr. Mayhew), the hon. Member for Aberdeenshire, West (Mr. James Davidson) and my hon. Friend the Member for Hornchurch (Mr. Alan Lee Williams) made general speeches covering wide questions of policy east of Suez and elsewhere. In the light of the statement made at the beginning of the debate and by the right hon. Member for Harrogate that we are dealing with devaluation and the consequences of it for the Armed Forces, I am sure that they will forgive me if I do not go into the major policy points but concentrate on the considerable number of other points which have been raised.

A point raised earlier in the debate and by the right hon. Member for Harrogate is that no cut is proposed in the amount of money available for T. and A.V.R. units. As promised, they will get their No. 2 dress during next year.

My hon. Friend the Member for Salford, West (Mr. Orme) wanted a denial of a newspaper article which appeared last week or at the weekend. My right hon. Friend stated that the House will note the flat denial by the Malaysian High Commissioner in London that the Malaysian Government believe that Britain has every obligation to stay in Malaysia until the Vietnam war is over.

Mr. Orme

That is the denial of the Malaysian High Commissioner in Britain. Does it match with the British Government's point of view?

Mr. Reynolds

Of course it does. It would be hardly possible for one party to an alleged secret agreement to deny it publicly.

The right hon. Member for Harrogate said that the reduction of this £100 million meant that the Services would miss getting the provision that they should get or expected to get in the coming year. That is perfectly correct. We have made no secret about that in this debate or in our earlier statements. My right hon. Friend said also that we would be operating on narrower margins. That is nothing new. The right hon. Member for Harrogate is well aware of the very narrow margins in respect of certain kinds of ammunition on which the Army was operating on the day that he left office in 1964. He was well aware of it. The margins are much wider now than in 1964. We always operate on rather narrow margins, and that was a very narrow one indeed. I am glad to be able to say that it has been rectified in a large number of ways as far as ammunition is concerned.

The hon. Member for Hendon, North (Sir Ian Orr-Ewing), who explained why he cannot be here tonight—I understand that he is dining with the Kent County Cricket Club I only hope that he can square that with his constituents in Middlesex—asked about H.M.S. "Victorious". This ship is over 20 years of age and was due in any event to go out of service in 1969. It will be scrapped, as my right hon. Friend has announced, and will save £4 million on the present Estimates and defence costs next year. I believe that there was no other course than the scrapping of this ship once it was decided not to carry on with her commissioning and put her into service.

The hon. Member for Hendon, North and others suggested that "Victorious" should be put into reserve in some way. There are considerable objections to that. To put the ship into reserve would mean completing the refit and repairing the tire damage at a cost of £300,000. The ship was to go out of service in any event in 1969 under the Government's previously announced plans for aircraft carriers. If she was going into reserve at long notice, she would have to be completely or largely destocked. It would take a long time to restock her again if she was called back into service. If she was to be put into reserve at short notice, it would cost £2¾ million to keep her in reserve at short notice and would reduce the savings on this project from £4 million down to £1½ million.

Sir G. Sinclair

How much money had been spent on the refit until the time of the fire in "Victorious"?

Mr. Reynolds

I understand that the amount spent on this ship since 1962 is in the region of £10 million, but a Question about this was answered by Written Answer this afternoon. The fact that the ship is now to be scrapped and must be completely destocked and de-equipped will provide more work in Portsmouth Dockyard than was planned and will have to be fitted in. I was asked to what extent work in the dockyards would be affected. It will provide more work in the dockyards than was originally planned and it must be fitted in with the present dockyard programme. The savings in civilian personnel announced by my right hon. Friend do not affect the dockyard.

My hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) said that a figure of £370 million had been announced for Polaris submarines. He worked out a figure of £52 million for each of four submarines, making a total of £208 million, and facilities at Faslane and elsewhere, £45 million, and asked for details of the rest of the money to make up the £370 million. The remainder is being spent on the cost of developing the United Kingdom components of the submarines and missiles, on spares and practice missiles for the submarines and on support and test equipment.

I must, however, tell my hon. Friend that our last cost exercise on the Polaris submarines has cast considerable doubt on the validity of the figure of £370 million. In case my hon. Friend is worried, I assure him that we expect to get these submarines and all support facilities completed for less than the £370 million announced a short while ago. I would rather not go into detail now, but I expect the final figure to be at least £20 million, possibly more, less than the £370 million already announced.

Mr. Emrys Hughes

Will the material which we are getting from America go up in price as a result of devaluation?

Mr. Reynolds

That which has still to be paid for will, of course, be affected by devaluation. The cost of that is included for next year in the figures given this afternoon by my right hon. Friend. The whole of the debate and the figures given by my right hon. Friend concern the effect on next year's defence budget.

My right hon. Friend promised that I would inform the House about the action which is to be taken on the important question of the pay of Service men overseas, particularly in areas affected by devaluation. Not all of them, of course, are affected by the full effect of United Kingdom devaluation, because certain other countries in which they are stationed have carried out devaluation or adjustments at the same time. We have already passed one pay day for the vast majority of soldiers, sailors and airmen overseas and we made provision for this. We are now working out the provision for the next few weeks by issues to be made to soldiers, sailors and airmen at the same levels of local currency as they would have received prior to devaluation.

In other words, if a man was actually drawing over the pay table—I am not talking about pay now—£5, he got X number of Deutschmarks and for the next few weeks he will be able to draw the same X number of Deutschmarks. If he wants suddenly an increased amount he will have to make out a case for it, but the amount which he has been used to drawing over the pay table he will continue to be able to draw. We are now looking at the whole problem of overseas allowances. If there is any case of hardship it will have to be dealt with separately and singly, but I think that this provision will cover the vast majority of people.

Mr. Ramsden

In other words, for administrative convenience a limit is imposed which was not previously imposed?

Mr. Reynolds

No. If a man has been drawing X number of Deutschmarks he will continue to be able to draw that number of Deutschmarks. If he was drawing 10 he will be able to continue to draw 10.

During the next two or three weeks we shall look at this problem of getting the local overseas allowance issued at a prearranged rate of Deutschmarks. It will take us a few weeks to amend the local overseas allowances but this provision worked last week and it will continue to work for the next few weeks till we get the allowances worked out.

Sir Harmar Nicholls (Peterborough)

If a man wants to draw extra to send home or to meet his obligations he will have to apply to his commanding officer?

Mr. Reynolds

There is pay machinery overseas which the soldier will be able to use in the normal way.

I should like to say a little more about this. This will give us a breathing space to work out the local overseas allowances. The soldier's, sailor's or airman's pay is the same whether he is in the United Kingdom, or whether he is overseas. The question here is the difference between the actual cost of living at a standard which a man may be expected to have in this country, and the cost of roughly the same standard overseas, where the living costs may be higher than they are in the United Kingdom. The difference may be made up by local overseas allowance to ensure that his pay will not change as a result of the effects of devaluation. That will have to be adjusted in the local overseas allowance, because of the differences in the value of money in various parts of the world. We are looking now at the level of overseas allowance to see what is to be done to make up for the effects of devaluation.

It is most important that I say straightaway that there is of course no case for what was asked by one or two hon Members opposite, that there should be a 16.7 per cent. increase in overseas allowance to make up for a 14.3 per cent. devaluation of the £. One has to look at various elements of the pay of soldiers, sailors and airmen. A soldier, sailor or airman, of course, pays National Insurance. That will still be paid in sterling, and there is no case for giving compensation for that part of his income.

He pays Income Tax and since that is paid in sterling he does not need compensation for loss of purchasing power here, If he is living in a quarter for which pay is deducted, that payment is also made in sterling and is not increased by devaluation. Perhaps he purchases a fair amount of his supplies from a N.A.A.F.I. shop. Though prices vary in different parts of the world and also to a certain extent, conditions vary within N.A.A.F.I. itself, a large part of the goods available in the N.A.A.F.I. shops are purchased direct from the United Kingdom, and there is no loss of purchasing value there. It is not a simple matter. It depends on how much money a man remits home and how much he is paying into the Post Office Savings Bank. It is an individual matter, and this is where the difficulty comes in. Over one-third of the total entitlement of pay in B.A.O.R. is not spent in B.A.O.R. but comes directly back to the United Kingdom.

Mr. Ramsden

This is a point I wish to ask about. It is important. Suppose a man's pay is divided as to one-third between what he draws in Deutschmarks and as to two-thirds what he allows to his wife over here in sterling. If the allowance is to go on at the same amount of Deutschmarks, can we have an assurance that the amount allowed to the wife in sterling will not be reduced?

Mr. Reynolds

Money drawn in sterling will still be for the same amount. For example, if a soldier asks for £5 or £6 to be paid to his wife, bearing in mind that all the calculations of his pay are in sterling, then that is paid to his wife by whatever arrangements he makes. But the local overseas allowances make some provision for that, because the amount of the local overseas allowance received by a single man is different from that received by a married man who has his family with him and different again from that received by a married man who has his family at home in this country.

The right hon. Gentleman is well aware of that. But it takes a little time to sort all these matters out, and we are providing this temporary machinery to keep us going for a few weeks to enable us to carry out an extensive exercise into the local overseas allowances which we hope to be able to introduce some time later this year. The new local overseas allowances, once fixed, will be operative from the date on which they are promulgated. They will not be back-dated because we do not believe that that will be necessary.

Mr. Powell

Will the hon. Member say a little more about the principle on which it is proposed to revise the local overseas allowance, and in particular can he cast some light on what his right hon. Friend meant by referring to his intention to see that the Services suffered at any rate no more than did their civilian colleagues in this country?

Mr. Reynolds

Yes. The local overseas allowance is primarily designed to make sure that the Service man can live to at least the same standard overseas as he does at home. We have now to take the fact of devaluation into account in recalculating the local overseas allowance for each station.

Commenting on that statement made by my right hon. Friend, it has been said —one would not have thought so from some of the speeches made today—by the Prime Minister and other Ministers that we expect that as a result of devaluation prices in this country will rise by about 3 per cent. In calculating the future local overseas allowance, one has to take into account what we think will be the inevitable effect of devaluation on United Kingdom prices, since the local overseas allowance is designed to provide a person with a standard of living similar to that in the United Kingdom. That was the point covered by my right hon. Friend's remarks.

The right hon. Member for Wolverhampton, South-West said that we had not yet received a reply from the Western European Union about our proposal to withdraw one brigade from Germany. He is quite right. We have not yet received that reply. But our colleagues are fully aware that we have been planning from the start to bring that brigade back in the three months beginning in January. We expect to get their reply before the end of the year and we hope to be able to carry on with the withdrawal, as planned, beginning in January and going on into March of next year. The right hon. Gentleman also asked about the future in Germany. The cuts in Germany are limited, as my right hon. Friend pointed out, to certain items of equipment, and current proposals include no further troop withdrawals from B.A.O.R.

My hon. Friend the Member for West Lothian (Mr. Dalyell) asked about the jungle warfare school in Malaya. That school has no particular connection with any treaty or other commitment which we have in South-East Asia. It is for our own purposes, for training our own troops, but it is well known, because Questions have been asked about it in the House, that from time to time, whenever possible, we have used it to train soldiers from friendly nations. Details of the numbers have been given in answer to Questions.

The hon. Member speaking from the Liberal benches, the hon. Member for Aberdeenshire, West (Mr. James Davidson), wanted to save a lot of money, and he gave a great many details about equipment, but it would take me far too long to deal with all the items that he men tioned, including the hunter-killer submarine and the extra bits and pieces. I cannot believe that he has his arithmetic right and that we could do everything he wanted and still save £300 million.

I assure my hon. Friend the Member for West Lothian that I have seen many of the papers in the Department about Aldabra which pointed out the problem of ecology and other problems. I was not dealing specifically with the subject—others were doing so—but I was reading the papers because my colleagues were dealing with them and the papers were going round the Department. We were well aware of many of the difficulties. I will not say that we were aware of all of the problems, because it would be foolish to suggest that, but we were certainly aware of the vast majority of them, probably before my hon. Friend even knew of the existence of the place. I can tell my hon. Friend that for the first time in fifty years we took scientists on the Ministry of Defence boat to look at the island.

My hon. Friend was also concerned that my right hon. Friend said today that one of the items of saving was £10 million resulting from certain deliveries of equipment expected during the year—mainly on the aircraft bill—probably not being available. He expressed some dismay that this amount of £10 million could be regarded as a saving, and said that had it not been for our having this task of saving £100 million on defence the money would have been spent on something else.

I can assure my hon. Friend that there is nothing unusual in that. On defence we operate, as he and all hon. Members know, on a fixed budget. There are a large number of essential and very useful things that we ought to have in order to provide properly for our defence policies but, as the right hon. Member for Harrogate said, because of shortage of resources it is never possible to have the perfect defence system. In about a fortnight or three weeks, when we had identified this £10 million, it is more than likely that we would have said "We cannot have that this year, but there is a list of other things pushed over to other years and we will try to bring it forward." My hon. Friend would then probably say, "You have cut out items X and Y."

As I say, we work on a fixed budget and we are having to put aside some desirable things. As he will know, at this time we do a lot of juggling backwards and forwards. However, it is not usual for Governments to publish items that they are not putting in the Estimates. They more usually put in the Estimates with the items detailed and ask for the approval of the House. That is the procedure we shall follow in this occasion as well.

My hon. Friend the Member for West Lothian—I seem to be devoting a large part of my remarks to the points he raised—asked how we were getting on with the statement in the White Paper of January-February of this year that we were looking at the question of military forces giving additional aid to the civil power. The Commander-in-Chief, Scotland, with explicit approval from the Ministry of Defence, has within the existing Regulations been trying to expand the amount of aid in Scotland. He has been getting experience in working with local authorities and the Forestry Commission. We have completed one air strip, and have attended to local paths, and so on, in forestry country.

At the same time, the Under-Secretary of State for Defence for the Army has been heading a committee which is studying the whole question. I hope that in the next few weeks, either in the Defence White Paper or in some other way, we can publish the results. It will then be necessary to have discussions with the C.B.I., the T.U.C., local authorities, youth organisations, and so on, to find out what, if any, alterations are required in the Regulations.

We have been asked how much it costs to bring back soldiers to the United Kingdom. My right hon. Friend has said that the families of 30,000 men are being withdrawn over a period, and to accommodate those families we have been buying about 8,000 houses in 77 different locations. We will finish the purchase during the coming months. We expect to have 4,500 houses ready, weather permitting, at the end of the financial year.

It will cost £33 million to bring back the families attached to the men concerned—some men, of course, are single. I must tell my hon. Friend the Member for Salford, West that money has to be spent on housing when soldiers are brought back, whether they are demobilised or not. If they are not demobilised, money has to be spent on providing barracks for them. But from somewhere in the public purse one has to provide accommodation for families, because at the moment there are just not enough houses knocking about.

We have been asked about our position in Thailand. I can only repeat what is contained in the July White Paper. We shall continue to honour our obligations to S.E.A.T.O. but our forces affected by S.E.A.T.O. plans will be altered. The Royal Engineers, at present doing roadwork in a backward area, will complete their work next year, and will then be withdrawn.

My hon. Friend the Member for South Ayrshire said that we are no longer an imperial Power. I agree that we are no longer an imperial Power, but in the past we have had benefits from being an imperial Power and we cannot overnight throw over our remaining obligations. It will take some time, both on the ground and in the minds of the people of the United Kingdom, before we reach the position where people believe that we are no longer an imperial Power. It will take time to see that change in our defence affairs and in the minds of the people.

Rear-Admiral Morgan Giles

On a point of order. In view of the completely unsatisfactory answer by the Minister to questions about the future of H.M.S. "Victorious", I beg to give notice that I will raise the matter on a future Adjournment.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.