HC Deb 13 July 1976 vol 915 cc350-2
9. Mr. Andrew F. Bennett

asked the Secretary of State for Defence what are the results of changing values of sterling on estimated defence expenditure.

22. Mr. Loyden

asked the Secretary of State for Defence if he will publish an estimate of the increase in Great Britain's overseas defence commitments on the basis of the present sterling exchange rate as compared with 12 months ago.

23. Mr. Ron Thomas

asked the Secretary of State for Defence if he will give an estimate of the increased cost of Great Britain's defence commitments overseas on the basis of the present sterling exchange rate as against 12 months ago.

Mr. Mason

The Estimates for defence spending overseas for 1976–77 are contained in Table 5 of Annex A to this year's Defence White Paper. These figures were based on exchange rates ruling in autumn 1975, the conventional price base for Estimates. The main cost arises in Germany and the average exchange rate of the £ sterling against the deutschemark in July 1975 was not significantly different from that used in the Estimates. The depreciation of the £ sterling against the deutschemark since the Estimates were prepared has been about 13 per cent. The actual cost of our commitments will depend on movements in exchange rates throughout the whole of the financial year.

Mr. Bennett

I thank my right hon. Friend for his reply. What progress is being made in persuading the West Germans to make a greater contribution to the cost of keeping our forces in Germany?

Mr. Mason

My hon. Friend will notice that there is a specific Question later on the Order Paper on the Anglo-German offset agreement.

Mr. Loyden

Does my right hon. Friend agree that there is a contradiction in the Government's economic strategy, directed as it is towards resolving the problems facing the British economy? We are concerned with the gold reserve and balance of payments, yet we continue with countries like Germany, which have a tremendous economic advantage over this country, with this level of expenditure.

Mr. Mason

If my hon. Friend was referring to Germany's present economic circumstances compared with ours, and meaning that it should make a greater financial contribution to the next Anglo-German offset agreement, I agree with him.

Mr. Tebbit

Does not the main answer suggest that there is a good case for exporting more arms and military equipment and using the Armed Forces to help us to do so, which would enable us to pay the costs of our own vital defence services overseas?

Mr. Mason

No, I should not go so far as to use the Armed Forces purposely to start selling arms abroad.

Mr. Thomas

Does my right hon. Friend agree that if we had spent 50 per cent. less over the past decade on our overseas commitment we should have saved about £2,000 million in foreign currency, which could now have been used to buttress sterling, and we should not be faced with threats from international bankers to cut public expenditure? Do I understand my right hon. Friend aright when he says that the cost of keeping British troops in Western Germany will now rise to about £450 million a year?

Mr. Mason

That is too great a supposition to allow me to follow down that path with my hon. Friend. We promised in the 1974 General Elections that we should carry out our commitment to the electorate—namely, to start withdrawing our forces from abroad. We have already completed the withdrawals from Gan, Mauritius and Singapore. We are helping to better the economic circumstances of the nation by cutting out many of our overseas commitments and concentrating upon our NATO rôle.