HC Deb 09 November 1976 vol 919 cc192-4
3. Mr. Gwilym Roberts

asked the Secretary of State for Defence if, in the light of the Prime Minister's statement on British forces in Germany on television on 25th October, he will now set a time limit for the conclusion of an agreement for adequate offset arrangements by the West German Government.

9. Mr. Ronald Atkins

asked the Secretary of State for Defence if he is now able to report on his discussions with the West German Government on a new offset agreement on the BAOR.

Mr. Mulley

Our discussions with the Federal German Government are continuing. We have made it clear that we are looking for a substantial German contribution towards the cost of stationing British forces in Germany and that we hope to find an early solution to the problem. I cannot say when this will be, but I do not think it would be helpful to set a time limit.

Mr. Roberts

In view of the Prime Minister's forceful comments, which proved effective in scaring the German Government into providing us with loan arrangements, does my right hon. Friend agree that it is time to follow that up by putting the screw on and saying to the German Government "Now pay up, or else"?

Mr. Mulley

I do not think that my hon. Friend's interpretation of the remarks of my right hon. Friend the Prime Minister is completely accurate. My right hon. Friend was certainly not intending to scare anyone. I do not think that we should reach the best conclusion if I were to adopt exactly the tactics that my hon. Friend suggested. I stress, as I did on a previous occasion in the House, that we attach the utmost importance to reaching a satisfactory outcome to the problem.

Mr. Goodhew

Although the Prime Minister's remarks may not have been intended to scare anybody, they certainly scared our Allies in NATO. Is the right hon. Gentleman aware that the word that was on everyone's lips in Germany was "blackmail"? That is not an attractive word to attach to a British Prime Minister.

Mr. Mulley

A short while ago I was in Germany talking to the Minister of Defence, and that was not a word on his lips. I think that he may count a little more in these matters than some of the Germans with whom the hon. Gentleman was immediately in contact.

Mr. Atkins

Is it not time that Germany was scared into coming to a decent offset agreement? Negotiations have been proceeding for over 12 years without a suitable agreement being reached. Is he aware that a substantial part of our balance of payments deficit occurs in this area, and that if we brought home the British Army of the Rhine we should provide extra employment for British civilians, bearing in mind the 30,000 or more German civilians that are involved?

Mr. Mulley

I cannot see how bringing home the British Army of the Rhine would increase employment in Britain. As I have said, it is not our intention to do that. The Prime Minister was concerned to put the facts clearly before the British people and our friends and Allies in NATO. He wanted to make clear the substantial costs in foreign exchange that our valued commitment to NATO represents.

Mr. Hooson

Does the right hon. Gentleman regard the reputed massive contribution of West Germany towards the loan arrangements now being made for this country as part of the offset agreement, or as something entirely separate?

Mr. Mulley

As I thought I had made clear, we have not reached an offset agreement in the current year. It may well be that other considerations than the exact offset of BAOR will come into the reckoning.

Mr. Powell

If the pound is floating, is it not the case that there is no economic difference between foreign exchange costs and any other costs?

Mr. Mulley

I have great respect for the right hon. Gentleman's erudition, but I think he understands that if we have a foreign exchange deficit it must be financed by borrowing from foreign countries.

Mr. Hoyle

Will my right hon. Friend reconsider the question of a time limit for the new offset agreement? Surely we can no longer afford it. The Germans should be told plainly that that is the position. We should take up what the Prime Minister said and tell them plainly that if they are not prepared to pay for them we shall pull the forces out of Germany.

Mr. Mulley

I do not happen to think that that would necessarily be the best course for achieving the result that we want. I must make it clear to the House that, happily, the conduct of the negotiations does not rest with the Secretary of State for Defence.

Mr. Ian Gilmour

Will the right hon. Gentleman tell the House what steps he is taking to repair the damage done to the morale of our forces by the Prime Minister's appalling broadcast and by the Government's continual cuts in defence?

Mr. Mulley

I do not accept that the troops are in a sad state of morale. Whilst in my present office I have seen a number of units and I do not think it would be right to say that morale is bad. There is a great deal to be said for candour, and that was the characteristic of my right hon. Friend's television programme.