HC Deb 20 March 1979 vol 964 cc1288-9
6. Mr. Alan Clark

asked the Secretary of State for Defence what is the present state of the United Kingdom's arms contracts with Iran; and whether he will make a statement.

Mr. Mulley

The previous Iranian Government informed our ambassador on 6 February that the supply of Shir tanks to Iran and action on certain other defence contracts should be terminated and discontinued. These contracts are therefore being brought to an end and the Iranians are being informed accordingly. We have started to discuss with the new Administration in Iran what action they want us to take as regards other defence contracts.

Mr. Clark

Will the Secretary of State at least tell the House what back-up plans he has for allowing the British Services to benefit from this unexpected windfall, particularly since he and his right hon. Friends so frequently used the term"pre-financed"in their earlier descriptions of these contracts? This can mean only that the equipment will now come in at a bargain price if we choose to take it ourselves.

Mr. Mulley

On the question of pre-financing, the contracts involved progress payments. There can be no question of our not having to account for the moneys received and the tanks already supplied. It is not a question of a large number of tanks which have been paid for, and there is no question of their being used for the British Army in that context. The Chieftain tank is still an effective weapon. Unless the Army is to re-equip totally with a new tank—one designed for different circumstances from those in Germany, where we need to deploy our own tank force—it is better to have the MBT 80 which we are planning, rather than to try to bring the Shir tanks in at an earlier stage. We are examining these aspects.

Mr. Terry Walker

Will my right hon. Friend consider the factories which have hitherto relied on Iranian contracts, such as the BAC dynamics group factory at Filton? Can he say whether, if any contracts are available, they will be awarded to those factories to offset any redundancies which result from the cancellation of Iranian orders?

Mr. Mulley

We are in touch with all the firms involved in these contracts. Where possible, as my right hon. Friend said in answer to an earlier question, in consultation with other Departments we are seeking to provide alternative work.

Sir Ian Gilmour

Is it true that the Ministry of Defence placed a number of contracts on behalf of the previous Iranian Government with defence firms in this country, without achieving cover in the form of an order from the Iranian Government of the day?

Mr. Mulley

No, not to my knowledge. In each case there have been proper contractual arrangements.

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