HC Deb 26 April 1977 vol 930 cc1018-20
13. Mr. Gwilym Roberts

asked the Secretary of State for Defence what payments have been made by the Federal Government in each of the past five years towards the costs of British forces in Germany; and what further progress has been made in obtaining adequate offset arrangements.

Mr. Mulley

Under the terms of the 1971 Anglo-German Offset Agreement which expired on 31st March 1976, Her Majesty's Government received a total of DM550 million in five equal annual instalments. As for the second part of the Question, I must refer my hon. Friend again to the statement made to the House by my right hon. Friend the Prime Minister on 25th January last.

Mr. Roberts

Does my right hon. Friend agree that the position in respect of deutschemarks and the pound—which means an intolerable £500 million drag on the balance of payments and which is effectively a transfer from poor Britain to rich Germany—cannot continue? Can he give the House some hope that, following the Prime Minister's visit to the British Army of the Rhine and his meeting there with the German Chancellor, his right hon. Friend will not come back empty-handed?

Mr. Mulley

I should make it clear that the Prime Minister's visit to BAOR, which I much welcome, is not for the purpose of negotiating the details of an offsetting agreement, which, of course—following the precedents of successive Governments—is a matter for the Foreign Secretary.

I am hopeful that a successful offset agreement will be achieved because, in the present circumstances at any rate, there is an imbalance between our foreign exchange position and that of the West German Government.

Rear-Admiral Morgan-Giles

When the Secretary of State discusses these financial matters with the Germans, will he make sure that they—and, indeed, our NATO allies—understand what was enunciated a few months ago by the Minister of State when he said that in future our defence spending would be conditioned by our perception of the threat, which is a good deal different from the Government's previous policy regarding economic and financial vicissitudes or comparison with the expenditure of other countries? This is a new deal. Will the right hon. Gentleman make it clear to our allies?

Mr. Mulley

The hon. and gallant Gentleman is now on a rather different point. The question of offset is a matter between allies of trying to ease the foreign exchange burden of fulfilling our NATO commitments, which, as I have already confirmed this afternoon, we have no intention of changing.

Mr. Newens

Does my right hon. Friend agree that for many years—during which we have been obliged to accept these heavy outgoings—a considerable economic burden has been imposed on the British economy which has helped the Germans to go ahead industrially while we have been held back? Is it not now high time that we made haste in demanding that a change should take place in these arrangements so that we no longer have to accept the heavy burden by which we are, in fact, subsidising the West German economy?

Mr. Mulley

My hon. Friend has put the matter in colourful terms, but it is the case that the foreign exchange benefit to the recipient country of foreign forces is offset by the loss of foreign exchange to us and to those who station forces there, although the stationing of forces in Germany is part of our NATO collective defence arrangements. It is on this basis that we are seeking a continuation of the offset agreement. The detailed negotiations are in the hands of the Foreign Secretary, and I hope that he will succeed shortly.

Mr. Goodhart

While one does not expect the Prime Minister and the West German Chancellor to discuss the details of the offset agreement, is it not absurd that they should have spent hours together visiting BAOR without discussing the general principle of the subject at all?

Mr. Mulley

Since I have not had the pleasure of seeing the Prime Minister because he is still in Germany, I do not know what he and the Chancellor may have discussed in the time they spent together, but I hope very much—and this would be the wish of all the forces in Germany—that they spent most of their time discussing the defence matters of the units they were visiting.