HC Deb 24 June 1968 vol 767 cc12-5
21. Mr. Wall

asked the Minister of Technology if he will now make a statement on the cancellation costs of the 50 F111s ordered from the United States of America.

52. Mr. Goodhart

asked the Minister of Technology if he will now publish details of the cancellation costs of the 50 Fills agreed with the United States Government.

Mr. Stonehouse

Negotiations are continuing, and it may be some months before I am in a position to make an announcement.

Mr. Wall

Will the hon. Gentleman comment on reports that the cancellation costs are likely to be £62 million and that we shall also lose the right to offset bids of £125 million? This is an important matter. I hope that he will be able to make a statement soon.

Mr. Stonehouse

I am in a position to say now that there is no substance in the Press reports, and some of the estimates which have appeared are quite excessive.

Mr. Goodhart

Will the hon. Gentleman check on how these reports appeared in the Press? There were most authoritative reports carried in all the leading newspapers that the bill will be £60 million. Will he make sure what has happened?

Mr. Stonehouse

What we want to ensure is that we arrange the cancellation charges so as to put the least possible burden on the British Exchequer here. It would be possible for us to agree now on certain proposals which have been made to us, but the negotiations are continuing in order that we may reduce the amount of charges which we have to pay. I do not want to add to my original reply that the reported figures are excessive.

Mr. Frank Allaun

Will my hon. Friend take it that the cancellation is warmly welcomed on this side of the House? What would have been the cost of the order if it had not been cancelled? Second, as we are ending our east of Suez rôle, may we have an assurance that there will be no substitute for this aircraft which we no longer need?

Mr. Stonehouse

I thank my hon. Friend for his support for the cancellation. I am not in a position to give him an exact figure of cost, but I can assure him and the House that the saving is considerable.

Sir A. V. Harvey

A vast sum of money has been wasted. How do the Government propose to pay this money, in view of the state of our economy? Has the hon. Gentleman tried to negotiate some form of arrangement for services to the United States in lieu of actual cash?

Mr. Stonehouse

This is part of the negotiations which we are now conducting with the Department of Defence. The question of spreading the payments or having them earmarked against something else will be one of the matters considered.

22. Mr. Corfield

asked the Minister of Technology if he will confirm that the agreement with the United States Government for the purchase of the F111 contained the standard clause requiring the contractor, in the event of cancellation, to take all reasonable steps to minimise the loss; and to what extent United States requirements for additional aircraft for their own forces to replace casualties and reinforce operations in Vietnam are being taken into account in negotiating cancellation charges.

Mr. Stonehouse

I can confirm that the F111 contract concluded on our behalf between the United States Government and the firm concerned includes such a provision. The United States authorities are at present making a detailed assessment of the extent to which they can make use of items manufactured for the United Kingdom in their own F111 programme.

Mr. Corfield

Can the hon. Gentleman go further and assure us that the losses which have already been sustained by this aircraft will be taken into account, as, presumably, they will have to be replaced, and is he satisfied that the contractors are doing everything possible to minimise the loss?

Mr. Stonehouse

We are satisfied that the Department of Defence is taking into account the use of the two aircraft which have been completed and also the materials which were being built up for the F111K programme. We very much hope that this will help to reduce the amount of the charge which we shall have to pay.

Mr. Emrys Hughes

It will cost this country many millions of pounds. Will these many millions of pounds be borrowed from the foreign bankers so that we may pay? Is this not one of the root causes of our economic troubles?

Mr. Stonehouse

I was asked a detailed question about cancellation charges. I think that my hon. Friend will forgive me if I do not use the advantage of Question Time to enter into a discussion on the broad philosophy.

Mr. McMaster

Has the Minister attempted to negotiate an offset for the cancellation charges, and if so with what success?

Mr. Stonehouse

These are all matters currently being considered in the negotiations.

Mr. Edelman

Is my right hon. Friend satisfied, in view of the continuing Senate hearings, that the United States intends to go ahead with the manufacture of the F111?

Mr. Stonehouse

This is a matter for the United States Department of Defense, but I have had no indication that that Department is not anxious to go ahead with the F111 programme.