HC Deb 08 December 1982 vol 33 cc851-60 3.31 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Francis Pym)

As the House knows, Lord Shackleton, at the Government's request, produced and published in September an updated version of his 1976 report on the economy of the Falkland Islands. We are enormously grateful to Lord Shackleton and his team for their work.

In considering the report's recommendations, we have been guided by the need to assure the economic future of the islands through a development programme, while at the same time preserving the islanders' way of life as far as possible. The report has been discussed with the Civil Commissioner, with the island councillors, amongst the islanders generally and with other interested parties. Their views have been carefully taken into account.

The Government agree with the broad conclusions of Lord Shackleton's report and are ready to support action by the Falkland Islands Government in the following major areas covered by his recommendations: —A Falkland Islands Development Agency should be established. This would be provided with funds to buy land on the open market, and to divide it into smaller holdings. It would also have powers to make loans and grants towards the cost of a number of small-scale development projects. —The islands' agricultural research centre, the Grasslands Trials Unit should be expanded; —there should be a feasibility study on an improved harbour complex, including a new deep-water jetty; —the Stanley-Darwin road should be completed and the existing network of tracks should be improved; —a pilot scheme for salmon-ranching and a survey of shellfish resources should be established; hotel and guest house facilities upgraded; and cottage industry skills developed. Although they were not specifically covered in Lord Shackleton's report, we believe that urgent action should also be taken to improve the water supply and sewerage system in Port Stanley, and to study the requirements for future electricity generation and distribution, and the telephone system in the islands.

The following proposals made by Lord Shackleton in our view require further study: —Exploratory offshore fishing and the establishment of a 200-mile fisheries limit: the implications of such a limit, not least its policing, and the degree of commercial interest in fishing need to be carefully assessed. —Expansion of tourism: this will depend to a large extent on the establishment of commercial air links. We are not convinced by Lord Shackleton's proposal for the wholesale transfer and sub-division of absentee-owned farms. We believe that this is inappropriate and consider a gradual approach to land redistribution under the auspices of the Falkland Islands Development Agency more in keeping with the capacity of the islands' existing agricultural population and more consistent with realistic immigration prospects. We are also not convinced of the need for a major expansion of the road network and are looking at more cost-effective ways of improving transport within the islands, in particular by improving the existing network of roads and tracks.

Lord Shackleton proposed expenditure of between £30 million and £35 million. My tentative estimate is that the programme that I have outlined would cost about £31 million over six years. The Government also propose to make available a further £5 million for civilian rehabilitation, in addition to the £10 million announced in July.

The islands' economy will inevitably be affected by the presence of a sizeable military garrison there, and by the outcome of the Government's present studies into the feasibility and cost of establishing a better airfield on the islands.

I should also remind the House that the economic future of the islands does not depend on the Government alone. There will be continuing scope for private sector investment and involvement which I hope will be encouraged by the commitment that we are making to the islands' future. We expect that Government and private investment together will lead to the creation of new jobs.

We have restored the freedom of the Falkland Islanders and shall continue to do what is necessary to guarantee their future security. As Lord Shackleton has reminded us in both of his studies, the economic development of the islands will ultimately depend upon the degree of local commitment to the future of the islands. For our part, we shall do all that we can to enable the islanders to look forward to a sound economic future and a worthwhile life. Our positive response to Lord Shackleton's report demonstrates our commitment to this.

Mr. Denis Healey (Leeds, East)

Has this meagre response to Lord Shackleton's proposals secured the assent of the Falkland Islanders whom the Foreign Secretary says he has consulted? Can the right hon. Gentleman say why he has rejected Lord Shackleton's absolutely central proposal for the transfer of absentee-owned land to the islanders? How can he argue that the agricultural capacity of the population is inadequate when the present population is now farming the absentee-owned land? The question is whether one gives them some incentive to farm more efficiently which does not exist under the existing system.

Am I right in thinking that the right hon. Gentleman has accepted Lord Shackleton's view that there is no sense in expanding the airfield unless there are friendly airfields on the Latin American mainland from which traffic can operate?

What scope does the right hon. Gentleman see for private sector investment against the present background? The Minister said the other day that he hoped that some private entrepreneur would establish a fish and chip shop—or was it a unisex haircutting establishment? Does he really think that his proposals provide any incentive for private sector investment from Britain? Does not his statement expose the heroic postures of the Prime Minister about the Falklands as cynical vote catching? Does not his statement also reveal that the economic development: of the Falklands depends on friendly relations with the mainland?

Can the right hon. Gentleman confirm diplomatic correspondents' reports, which appeared with interesting unanimity in the press recently, that the Foreign Office rejects the Prime Minister's view that no negotiations can take place with Argentina before or after the next general election?

Mr. Pym: The Shackleton report was delivered in the Falkland Islands on the day that it was published here. It received careful consideration in the way that I described in my statement. The Minister of State naturally discussed it with the islanders when he was there. We certainly have taken full account of what they said.

Islander opinion, which has been consulted on the important matter of land redistribution, is unpersuaded of the advantages of wholesale sub-division in the way proposed in the Shackleton report. Our approach is gradualist. We shall start on a small scale and then see what develops. That is a sound way to approach the matter.

As to the airfield, it is not a question of a decision not yet having been reached, because the airfield facilities must be improved. A feasibility study is in progress and in due course my right hon. Friend the Secretary of State for Defence will inform the House of his conclusions.

With the sizeable garrison on the islands, there is already scope for private sector investment. Interest has already been expressed in the fishing possibilities and in mutton processing. That is happening, although Lord Shackleton and his team were not optimistic about it.

I remind the right hon. Gentleman that since the end of the conflict we have done everything that we can to reestablish friendly relations with the mainland and especially to normalise our relations with Argentina. We have achieved progress on the financial side, but we have not yet been able to obtain the lifting of the economic sanctions. However, the United Kingdom and other Community members made a joint approach to Argentina. That approach did not get an encouraging response, but we hope that in the long run—the sooner the better—proper relations will be restored, because that is of real interest and importance to the Falkland Islanders. We are doing our best to achieve that.

Mr. Healey

The Secretary of State did not comment on my point that Lord Shackleton' s report stated that the case for an airfield rests crucially on the readiness of neighbouring countries on the mainland to make available airfields for British aircraft and to send their aircraft to the islands. Has any progress been made in that respect, and does the Secretary of State accept Lord Shackleton's judgment on the case for an airfield? The right hon. Gentleman did not comment on the Foreign and Commonwealth Office briefing of diplomatic correspondents to the effect that it disagreed with the Prime Minister's view on negotiations with Argentina.

Mr. Pym

"Negotiations" is not an appropriate term because, first, formal hostilities have not been ended and, secondly, even with the help and support of our European friends, Argentina is not prepared to lift economic sanctions. We have a long way to go before we reach that position.

The right hon. Gentleman is correct to say that air communications should be as easy and as cheap as possible. That means facilities on the mainland. We would welcome now the establishment of a regular commercial air service, but there are obvious difficulties in the aftermath of the fighting. There is no immediate prospect of establishing such a service, but we hope to do so in due course and with the minimum of delay.

Dr. David Owen (Plymouth, Devonport)

Will the Secretary of State make it clear that when formal hostilities are ended and economic sanctions have been lifted the Government will be prepared to enter into discussions, without pre-emption on either side, about the long-term future of the Falkland Islands? Nothing would give greater security to the islanders than such a clear declaration.

Mr. Pym

Both during the conflict and subsequently I have said to the House constantly that it must be in the islanders' long-term interests to restore good relations with the mainland. The right hon. Gentleman postulates a hypothetical position on which I shall not comment, except to say that he knows that I have an open mind about how we can make progress in the way that he describes that will benefit the present islanders and future generations.

Sir Anthony Kershaw (Stroud)

Would it not be desirable for an airfield to be constructed so that, as far as possible, it could stand by itself without help from the mainland? Will my right hon. Friend bear in mind that for many generations, when there were no aircraft, communication by sea was perfectly satisfactory?

Mr. Pym

Yes; but, if one is to encourage the development of tourism, it must be made easier to reach the islands. Whether or not we can establish commercial air services with the mainland soon, we need better airfield facilities on the island, and the question is how that can best be provided. My right hon. Friend the Secretary of State for Defence will report to the House in due course.

Mr. Nigel Spearing (Newham, South)

Is the Secretary of State aware that the Shackleton report states on page 28 that between £½ million and £1 million a year is sent back to Britain from the 10 land companies? Lord Shackleton's proposal publicly to own the land would staunch that flow. If the Secretary of State is worried about management problems, why cannot the new development authority take over the land and bit by bit—or gradually, as he said—transfer the land as and when it is appropriate? Would that not benefit the islanders, and would it not gain both national and international agreement?

Mr. Pym

The Government do not believe that to be the best approach, nor is it the general wish of the islanders.

Sir Hugh Fraser (Stafford and Stone)

Will my right hon. Friend make it clear whether the Government propose to proceed with the creation of a better all-weather airfield? That has always been the key—whether we are friendly with or negotiate with Argentina—to the eventual safety of the islands. We are talking about a feasibility study now, but, after the first Shackleton report, I and many hon. Members pressed many times for such a study and seven or eight years ago it would have cost only a few million pounds. Will the Government make it clear that they are determined to construct an all-weather airfield on the islands that is capable of reinforcement if need be?

Mr. Pym

Yes, Sir.

Mr. Tam Dalyell (West Lothian)

What hard evidence is there that any South American Government on that continent will enter into serious negotiations about providing landing rights with a Prime Minister—not with the Secretary of State, because he had no part in the decision to sink the "General Belgrano"—who, in cool calculation, sank the "General Belgrano"? Why should South American Governments deal with such a leader?

Mr. Pym

Although it has not been possible to make progress in arranging a commercial air service involving a mainland airfield in any country, I can tell the hon. Gentleman that there is a general desire in every Latin American country, with the exception of Argentina, not only to maintain but to improve their relations with Britain and Europe. That is reciprocated by us. I hope that from that general desire will grow the possibility of establishing the airfield facilities that will be of great help to the islanders.

Sir Bernard Braine (Essex, South-East)

Bearing in mind that infirmity of will in this matter has been the curse of the Falkland Islands during the past 20 years, and recalling that Lord Shackleton recommended six years ago that an all-weather airport was crucial to the development of the islands and that he still says the same, will my right hon. Friend assure the House that, feasibility study or not, it is the Government's firm intention not to keep the Falkland Islands dependent upon Argentina for its external communications for one moment longer? Will he assure the House that those air facilities will be provided and supplemented by adequate sea communication?

Mr. Pym

I thought that I had made it clear that the question is not whether we shall improve the airfield but the best way of achieving that objective. There are various ways of doing it and that is what is being studied. However, my hon. Friend's principle is conceded, and there will be an improvement.

Mr. George Foulkes (South Ayrshire)

Is the Foreign Secretary aware that Lord Shackleton said that the prospects for any development in the Falkland Islands are gloomy unless a civil air link is established quickly? Will the Secretary of State confess that his officials have approached Chile, Uruguay and Brazil and that all those countries have said that there is no prospect of their granting landing rights to British aircraft? Will the right hon. Gentleman admit that?

Mr. Pym

We have had friendly conversations with all Latin American countries, but we have not been able to achieve—

Mr. Foulkes

And never will.

Mr. Pym

—the arrangement that I have sought. However, that objective is clearly in the interests of the islanders, and we are doing our best to achieve it.

Sir Hector Monro (Dumfries)

My right hon. Friend's proposals are both realistic and practical. Does he agree that the farmers of the Falkland Islands will welcome his policy of the gradual purchase of land through the Falkland Islands Development Agency, provided that it can start soon? Does he accept that money put into the Grasslands Trials Unit is money well spent?

Mr. Pym

I am grateful to my hon. Friend for his remarks. It is for the Falkland Islands Government to pursue the policies that I outlined, with our financial support, and we shall consult them. I have every reason to believe that they will make an early start.

Mr. David Young (Bolton, East)

Will the right hon. Gentleman recognise that, as Her Majesty's Government discovered where the Falklands were only after the invasion, hon. Members hope that no continuing commitment will be entered into until this House has discussed the matter in full? The Leader of the House failed to give me the assurance that I requested a week last Thursday that not a penny would be spent until this House had discussed the matter. In my opinion, the present discussion on this statement is totally inadequate to meet the future commitments that we may face if the Government go off on a tangent without consulting the House on the implications of future commitments.

Mr. Pym

It is not reasonable to describe my statement and the provision that it outlines as unreasonable and inadequate. In total, it is a sum within the bracket suggested by the Shackleton report. My right hon. Friend the Leader of the House has heard what the hon. Gentleman said about a debate, and that of course is a matter for him.

Sir John Biggs-Davison (Epping Forest)

Do not the local commitment and the private investment which my right hon. Friend rightly seeks depend on confidence at home and in the Falkland Islands that the British will to defend British sovereignty in the Falklands will be maintained? In view of my right hon. Friend's exchange with the former Foreign Secretary, the right hon. Member for Plymouth, Devonport (Dr. Owen), is my right hon. Friend aware that the nation will not tolerate a return to the shilly-shallying, ambivalent conversations that took place over the years on the question of sovereignty?

Mr. Pym

My hon. Friend is quite right in saying that private investment depends on confidence. I hope that he will agree that my statement and the contribution that the Government are making, as outlined in the statement, about economic development are strongly in the direction of that confidence.

On the security of the islands, we shall of course do whatever is necessary, as we are now doing, to secure the safety of the people there. The question of sovereignty does not arise.

Dame Judith Hart (Lanark)

Will the Foreign Secretary answer the following points? Will the £31 million plus £5 million that he announced come out of the budget of the Overseas Development Administration? Does his announcement about the development agency and his attitude to the private sale of land mean that Government money will subsidise the infrastructure from which Coalite and other private owners can make further profit? Given the long-term problems of resolving the diplomatic questions concerning the Falklands, has he, before he made this statement, had any discussions with the United Nations Secretary-General, because clearly United Nations trusteeship is a possible future solution?

Mr. Pym

In answer to the right hon. Lady's first question, the new aid for the Falklands will be financed mainly from additional funds. No existing commitments will be cut to pay for it.

In answer to the right hon. Lady's question about infrastructure, what I announced today goes further in that direction than the Shackleton report recommends. In our view, it is important for the development of the islands, and the islands and the islanders will benefit from it.

In answer to the right hon. Lady's last question, I am commenting on the report by Lord Shackleton and his team, and in my view no question of United Nations consultation arises.

Mr. Churchill (Stretford)

Does my right hon. Friend, as a former Secretary of State for Defence, agree that as long as the air defence of the islands depends on a single runway on a single airfield we shall be in an exposed position in defending the Falkland Islands from a large scale air attack? Will he confirm that the Government are determined to find a location for developing a second airport?

Mr. Pym

That is a matter for my right hon. Friend the Secretary of State for Defence. There will be opportunities in due course for my hon. Friend the Member for Stretford (Mr. Churchill) to question my right hon. Friend on that matter.

Mr. Kevin McNamara (Kingston upon Hull)

Will the right hon. Gentleman say how much the sums he has announced represent per capita in investment on the Falkland Islanders, who have been facing tremendous problems, and what it would mean if the same investment were made in areas in the United Kingdom where unemployment is, say, over 10 per cent., so that we could then gauge the value of the Government's consideration for the Falkland Islanders and for the unemployed, say, in Hull? Would it not be important for the Government to announce at this stage the building of cold store facilities in the Falklands as the first requirement in the proper maintenance and supply of mutton to the Services there, and as a prerequisite for fishing interests in the deep waters, as the right hon. Gentleman described?

Mr. Pym

The answer to the hon. Gentleman's first question is £17,000. The comparison that he makes is nonsensical, and it does not help in any way. One recalls the bridge that was built in certain circumstances which cost a lot of money which might with advantage have benefited the unemployed in the hon. Gentleman's constituency.

The cold store could well come in due course, if the development of the islands takes place in a way that makes that sensible. I have said that some private investment sources are interested in the possibility of mutton processing, and if the fishing possibilities are explored there may be further reason for a cold store. However, it is too soon to judge.

Mr. John Farr (Harborough)

Although I welcome my right hon. Friend's statement, he said nothing about the mineral resources or about the important problem of population introduction from Great Britain to the Falkland Islands. In addition to the recommendations in the Shackleton report, which my right hon. Friend suggested for agriculture and farming projects there, as the House last night approved an increase in the Commonwealth Development Corporation allocation from a £500 million ceiling rate to £850 million, will my right hon. Friend tell us whether the CDC will be involved there in a meaningful way?

Mr. Pym

I agree that the resources in and around the islands are capable of exploration and, possible, development. As I said in my statement, we do not think that the stage has been reached in some cases where it is either sensible or right to put in Government money. However, they could be further explored, and if the prospect seems more promising than it does now further money can be found from private sources and, possibly, public sources. However, that remains to be seen.

Population increase, again, is desirable in many ways, but it depends on how the plan and the economic development of the islands go. If they are successful, clearly there would be an increase. Otherwise, the only increase may be in the garrison. We must see how things go.

What my hon. Friend said about the Commonwealth Development Corporation is right, but, off the cuff, I cannot say whether it will be a contributor to the Falkland Islands' financial resources. The answer is probably "No", but I shall let my hon. Friend know.

Several Hon. Members


Mr. Speaker

Order. I propose to call four more hon. Members from either side, and then we shall move on to the main business.

Mr. Andrew Faulds (Warley, East)

As British naval and military forces brilliantly salvaged the politicians from their failures, is it not time to recognise that the Falkland Islands are a long-term and expensive liability, and that the sooner we come to terms with the realities and interests of South America the better?

Mr. Pym

The hon. Gentleman is entitled to his view. Obviously, it was an expensive exercise and expedition. However, not only the House but the country supported our wish to drive back the aggressor and restore freedom to the islanders. No one says, or pretends, that it was a cheap exercise.

Lord James Douglas-Hamilton (Edinburgh, West)

Will my right hon. Friend confirm that the French capacity to operate the island diversion scheme in getting long-haul civilian aircraft to land in the Austral Islands in the South Pacific can also be applied by us in the Falklands, in the context of a developed, or a new, runway?

Mr. Pym

That question is beyond my technical knowledge. I shall let my hon. Friend know the answer.

Mr. John Maxton (Glasgow, Cathcart)

In view of the large increase in profits that was announced by the Coalite Company yesterday, will the Minister say how much of that profit will be reinvested in the Falkland Islands? If the money is not reinvested in the Falkland Islands, why should that company continue to own the land, or why should the people of this country invest in that area, when the company that owns it is not prepared to do the same?

Mr. Pym

It is not for me to say what the company's intentions are. What I am concerned about, and what I think the House is concerned about, is to do everything that we can to improve the economic future and environment in the islands. That is what the statement is about.

Mr. Bowen Wells (Hertford and Stevenage)

Will my right hon. Friend reassure me that the developments that are to take place in the Falkland Islands are viable and profitable? Would it not be foolish to overload the Falkland islanders with many public investments, which the recurrent budget could not sustain? Will my right hon. Friend try to attract neighbouring countries and even Commonwealth countries to assist us in the development of the Falkland Islands in view of their strategic importance and control over the South American passage to the Pacific?

Mr. Pym

As I have announced in the statement, a considerable part of the resources that are allocated are for infrastructure, roads, agriculture and so on. Some is for the development of businesses of one kind or another. However, we must see how we go. If the future turns out to be reasonably hopeful and confidence returns, I think that there will be increased scope for developing more business. The only way that we can proceed is to take a gradual approach.

Mr. James Lamond (Oldham, East)

How can the Foreign Secretary say that sovereignty does not arise today when the success or failure of the package that he has announced depends on that very matter? Can the Falkland islanders, or those who he thinks will put money into the private sector investment in the Falkland Islands, safely disregard the repeated calls by the President of the United States when he was in Latin America for the resumption of talks about the future of the Falkland Islands, which can end only in sovereignty passing to Argentina?

Mr. Pym

The House knows the British Government's position. I do not think that the House would expect me to take any other position. We are trying to make Argentina change its attitude. They were the people who invaded the islands. They were the people who did all the damage. They are the people who are not now prepared to restore normal relations. The change that we want to bring about is there. We are doing everything that we can to achieve it. As I said before—and it is true—in the meantime the question of sovereignty does not arise.

Mr. Ivor Stanbrook (Orpington)

On the subject of land redistribution, in all the circumstances of this case would it not be a sensible interim measure for the Government to acquire the interests of Coalite Ltd. in the Falkland Islands?

Mr. Pym

We have not thought so.

Mr. Dennis Canavan (West Stirlingshire)

Why is it acceptable for the Government to use public expenditure to regenerate the Falkland Islands economy but not the British economy. Now that total Government spending on the Falkland Islands is to amount to about £1 million for every Falkland islander, will the Government ask Lord Shackleton to assess the likely effects on the British economy if Galtieri were invited to invade 10 Downing Street?

Mr. Pym

The hon. Gentleman knows the extent of our national resources that are helping our economy and the people adversely affected by rising unemployment. He knows of our schemes for youth and so on. That was a wrong comparison to make. To do anything less than what we have proposed in the statement would not be in accordance with the wishes of the House.

Mr. Robert Banks (Harrogate)

Bearing in mind the fact that the report draws attention to the rich resources of krill off South Georgia, will my right hon. Friend include a pilot scheme in his proposals for offshore fishing to see whether those resources can be commercially exploited?

Mr. Pym

We want to see the possibilities of fishing explored much more widely. We are considering how best to do that. There should be further studies before we put any money into that venture. We hope that it will turn out to have good prospects, but that remains to be seen.

Mr. Healey

The Foreign Secretary rightly revealed the fact that he has been trying, though in vain so far, to establish air links with countries in Latin America other than Argentina. I am sure that he can confirm that the main obstacle to that is the Government's refusals to enter into any sort of discussion with the Argentine Government. As it was he who referred to obstacles to such talks, will he assure the House, as the Foreign Office appears to have assured diplomatic correspondents, that once the Argentine Government have ended sanctions and the formal state of war with Britain, Her Majesty's Government will be prepared to enter into talks with Argentina without preconditions?

Mr. Pym

Let us consider that position when we get to it. What matters is the future of the islands, the islanders and the next generation. That is what we must consider. The fact that we have taken the line that we have over Argentina is not the reason why countries in Latin America so far have not been prepared to grant us air services. None of them has produced that as a reason. They are just reluctant at the moment to take that step for their own reasons. They have not identified that as a reason, nor have they said that if we did have discussions they would grant us such services.

The question of negotiations or anything of that kind does not arise at present, for the reasons that I have stated. We want to see a change of attitude by Argentina. That is of fundamental importance to the future of the islands. Even without that, in the meantime we are taking all necessary military steps to protect the islanders and taking economic steps here to make their prospects brighter.

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