Falkland Islands (Shackleton Report)

HC Deb 22 December 1982 vol 34 cc974-1041

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer.]

4.54 pm

The Minister of State, Foreign and Commonwealth Office (Mr. Cranley Onslow)

I should like to open the debate on the Shackleton report and connected matters by echoing the thanks that my right hon. Friend the Foreign Secretary paid to Lord Shackleton and his team in his statement to the House on 8 December.

Hon. Members will recall that at the end of May, even before the full repossession of the Falkland Islands was completed, the Prime Minister asked Lord Shackleton whether he would be prepared to update his original economic survey of the islands, which was published in 1976. He was asked to revise the conclusions and recommendations made in that original study, examining—and this is a particularly important point—social as well as purely economic aspects, and to report back as quickly as possible. Lord Shackleton agreed, and his updated report was completed in less than two months, as his introduction records—a considerable achievement. Most hon. Members will have read the report for themselves and will, I am sure, wish to join me in expressing both admiration and gratitude for the speed and thoroughness with which Lord Shackleton and his team carried out their commission. I should like to add that we intend to remain in close touch with Lord Shackleton and the members of his team over the implementation and, where necessary, further consideration of his recommendations, and I am confident that their advice will continue to be of value as we push ahead with the economic development of the Falkland Islands.

I should also like, at this point, to endorse what was said by the Civil Commissioner, Sir Rex Hunt, to the Legislative Council in Port Stanley on 16 December in which he paid tribute to the efforts of all those involved with the rehabilitation of the islands and expressed the Council's grateful thanks to Her Majesty's Government for the development programme we have approved.

Before I comment in detail, but not, I hope, at inordinate length, on the various elements in the development programme, and on some of our reasons for making the decisions that have so far been taken, I must say a few words about the progress of the reconstruction and rehabilitation programme, since any economic development requires a sound infrastructure.

Even before the Argentines had finally surrendered, we were starting to organise our plans for getting life on the islands functioning normally again as soon as possible. Our first task, obviously, was to re-establish the administration: we had to get the Civil Commissioner and some of the Councillors back, as well as the Chief Secretary and many of our overseas aid staff who had been removed after the invasion. The next priority was to get the schools running again, to ensure that the children's education suffered as little as possible from the hiatus of the occupation. We then had to set about the major tasks of rehabilitation.

The physical problems that faced us in Port Stanley on 14 June were not as severe as we had at some stages feared they might be. In Stanley itself most of the houses and other buildings had survived the fighting intact. The difficulties were still daunting. Seven houses had been wholly destroyed, 20 were completely uninhabitable and a further 167 had suffered varying degrees of damage. The problems of maintaining food and fuel supplies, essential services, medical treatment and internal telecommunications, were very real. At the same time we had to undertake the task of clearing up the filthy mess that the Argentines had left behind in the town. This was made all the more pressing and difficult by the severe winter conditions then prevailing. Machinery to co-ordinate and direct the task of rehabilitation was immediately established both in Stanley and in London. In the islands, following the return of Sir Rex Hunt on 25 June, the military and civilian authorities set up a joint committee to oversee co-operation in rehabilitation tasks. In London, similar machinery was established, based on my Department, but calling as necessary on the expertise and assistance of the Overseas Development Administration, the Minister of Defence, the Department of Trade and the Crown Agents. I convened the first meeting of this interdepartmental committee to coordinate rehabilitation work on 11 June, when victory on the Falklands was already in sight: and this committee has continued to meet at regular intervals ever since.

We drew up a first list of requirements in July in consultation with Falkland Islands Government and the decision was taken to make an initial allocation of £10 million towards the rehabilitation programme. We went ahead at once with orders for large quantities of building materials, fuel, equipment, tools, vehicles and other supplies to assist rehabilitation, and to replace stores and equipment destroyed during the conflict. We also ordered replacement aircraft for the Falkland Islands Government air service, whose entire fleet had been destroyed. All this new equipment and supplies had to be complemented with civilian personnel to run the rehabilitation programme.

In a matter of weeks the Overseas Development Administration selected and recruited 34 new personnel for the Falkland Islands Government. They were needed for a wide range of tasks: there were policemen and nurses; electricians, plumbers and mechanics for the public works department, with various supervisory staff; teachers, administrators and such senior Government officers as the Attorney-General, the Registrar-General and the development officer. They are all now established in Stanley, working in difficult conditions with considerable energy and enthusiasm. Some will be required for only about six months while others are on contracts ranging up to three years.

Meanwhile, many of the islanders had their own repairs to do, to make good the damage to their property. As soon as possible we set up a compensation scheme in the islands operated by my Department and drawing on the expertise of the Ministry of Defence claims assessment staff to provide prompt and adequate repayment to all civilians who had suffered damage, loss or injury. About 400 claims have now been settled and around £2 million has so far been paid out under this scheme. It will still be some time before the final claims are met, since these largely relate to long-term agricultural losses which are difficult to quantify. However, I think we can justly claim that this compensation scheme has proved a swift and effective means of making good the material damage and losses caused by the conflict.

In the islands, much of the early rehabilitation was, of course, undertaken by the Services. They really did a magnificent job. They performed with considerable ingenuity in patching up housing, filling in slit trenches, reinstating essential services like the water supply and the power station; and in clearing the deadly threat of booby traps and mines and other abandoned ordnance in the immediate area of the town. I know the islanders would like me to stress their awareness of the debt of gratitude that they owe to the Services, not only for their liberation but for the enormous amount of work that has been undertaken on their behalf since the end of the Argentine occupation. I was able to see for myself the good work done by the Queen's Own Highlanders and other units while I was there. The Civil Commissioner said in the address of 16 December to which I have already referred: We have all seen how hard the Armed Forces have worked, around the clock and seven days a week, often in atrocious weather and appalling conditions. They have accomplished more in six months than I would have believed possible even in the United Kingdom, let alone 8,000 miles from their bases and in a place lacking such basic facilities as a deep-water jetty". I should also stress the contribution that has been made by the staff of the Falkland Islands Public Works Department. It would be wrong, too, to forget the extent to which private landowners have also been active in the rehabilitation process. I know, for example, that the Falkland Islands Company went ahead with buying and shipping equipment to a value of £500,000 to repair and replace its losses without waiting for the settlement of its compensation claims.

When I visited Stanley in October, early in the Falklands spring, the town was beginning to look reasonably normal. It was obvious that a great deal had been achieved, through the combined efforts of all involved. I think that the House should recognise the very real efforts the islanders have made and are continuing to make under Sir Rex Hunt's leadership to ensure the success of the rehabilitation programme. However, it was clear then, in the nature of things, that the work that had been done on essential services was very much a first-aid operation to patch up already over-stressed plant and equipment so that these could continue to provide emergency services to meet immediate needs.

As a result of that, two weeks ago my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs announced our intention to provide a further £5 million over the next two or three financial years to enable the Falkland Islands Government to tackle a number of longer-term rehabilitation tasks. These will largely involve the more permanent reconditioning of essential services, and in particular the roads in Stanley, which have suffered both during the conflict and from the enormously increased traffic since the liberation, the water supply, the power system and the internal telecommunications system. We have concluded that major remedial work on the roads in Stanley and the road to the airport must be tackled before the onset of the next winter, and we are taking urgent action to engage a United Kingdom contractor for these works.

The medical and education services in Stanley have also come under strain. The House will know that the King Edward VII Memorial hospital in Port Stanley is now serving both military and civilian needs. This arrangement provides some benefits to the civilian population. The range of drugs available to the hospital is now extended, and the presence of Army medical teams means that there is no longer any need to evacuate most surgical cases. However, the number of civilian beds available in the hospital is now severely reduced. This has caused particular problems in geriatric care.

The medical staff, both military and civilian, are under severe presure. In the short term, I am considering whether we can relieve some of this pressure by providing additional administrative support to the doctors there. In the longer term, we shall have to work out the most effective way of handling both civilian and military needs, and this may well require the building of a larger hospital to cover both requirements.

The education service has also been badly hit. Most secondary education is conducted in Port Stanley itself. For several years, a new boarding hostel for children from the camp has been under construction. This building should have been finished some months ago, but there were problems over its construction, and it was then occupied by the Argentine forces. It is now serving as the headquarters of the British forces on the islands.

I am glad to tell the House that, in order to provide boarding hostel facilities for the 1983 academic year, the Falkland Islands Government have made arrangements to rent Stanley House from the Falkland Islands Company. Accommodation will be expanded by the use of either Portakabins or mobile homes in the grounds. Once these arrangements have been put in hand, we will turn our attention to the best way of providing permanent facilities for the future. At primary school level, education is divided between a school in Stanley and the system of education centred on the various settlements. At present, there is an acute shortage of the travelling teachers who are an essential part of the education system in the camp. I hope that it will be possible to find new staff to ensure that the service is fully operational for 1983: we shall be going ahead with recruitment as soon as possible.

Mr. Michael Shersby (Uxbridge)

rose—

Mr. Onslow

I should much rather not give way to my hon. Friend. I have quite a lot to say and I do not want to take up too much time. With the leave of the House, I shall be closing the debate. I shall be able to answer any questions that my hon. Friend raises when I reply.

I hope that the House will not mind my having dwelt at some length and in some detail on all this rehabilitation work. It is the indispensable preliminary to the further economic development of the islands. Lord Shackleton's report contains the assumption that the status quo will be restored. Although something remains to be done, work can now go forward hand in hand with the economic development programmes that were outlined to the House on 8 December, to which I will now turn.

In his statement my right hon. Friend the Foreign Secretary outlined some of the main purposes to which we expect to see the proposed new aid programme devoted. It may be helpful if I explain in a little more detail how we expect to proceed. My right hon. Friend's statement covered areas of work in which Her Majesty's Government are ready to support the Falkland Islands Government, taking account of the priorities that they had outlined to us.

As my hon. Friend the Under-Secretary of State for Defence Procurement confirmed in the House yesterday, we fully accept the need to provide a better airfield on the islands. Studies are in progress aimed at identifying the best site and the likely cost. The Ministry of Defence is taking the lead on this, but the Government will be taking full account of civil as well as military needs. I would add, however, that the question of air links with the mainland must be seen in the correct perspective.

They are highly desirable but, with due respect to Lord Shackleton, they are not absolutely crucial for our plans for the future development of the islands. The established way of moving goods to and from the Falklands has always been by sea. Indeed, Port Stanley now enjoys a much more frequent shipping service than before the conflict. This will continue, for the moment, to be the channel for normal supplies and for materials for rehabilitation and development, and the means of access by families and by routine travellers. It will, of course, still be helpful to establish sea and air links with the mainland at an early stage and we are continuing to pursue the possibilities. In due course, I believe, we shall see such links develop. Meanwhile, as I found the RAF air bridge is an effective means of meeting the needs of essential passengers.

Another central recommendation in Lord Shackleton's report was that a Falkland Islands development agency should be established. To bring this about, local legislation will be required and the island's newly appointed Attorney General is already working on the draft of it. We expect to be in close consultation with the Falkland Islands Government about this as the new development agency will depend, at least in the initial stages, on funds voted for overseas aid by this House. The agency will be accountable, through the Falkland Islands Government, to Her Majesty's Government and to Parliament.

Mr. Clinton Davis (Hackney, Central)

I apologise for intervening now. I know that the hon. Gentleman has much to say. Nevertheless, some ambiguity has arisen with regard to the Overseas Aid Vote. Perhaps the Minister would be kind enough to clear the matter up now as it is of considerable importance.

On 8 December, in answer to my right hon. Friend the Member for Lanark (Dame Judith Hart), the Foreign Secretary said that new aid for the Falklands will be financed mainly from additional funds. No existing commitments will be cut to pay for it."—[Official Report, 8 December 1982; Vol. 33, c 864.] Yesterday, in answer to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), the Minister for Overseas Development said that: The £31 million programme for the economic and social development of the Falkland Islands will be charged to the Overseas Aid Vote"—[Official Report, 21 December 1982; Vol. 34, c. 424.] Will the overall Vote be cut, in that the £31 million will be taken from it to pay for development?

Mr. Onslow

If there is any ambiguity, I am anxious that it should be dealt with. Perhaps the hon. Gentleman will allow me to deal with that question specifically when I reply to the debate.

The function of the Falkland Islands development agency will be to manage revenue-earning projects within the new development programme, and to provide grants and loans for suitable projects. It will also have powers to buy and sell land. I shall touch on that subject again later.

The newly appointed development officer has recently taken up his post within the Falkland Islands Government. He is already examining projects that will eventually come under the Falkland Islands development agency. We shall be ready to support them directly, through the Falkland Islands Government, in the interim. Meanwhile, there are further proposals for the appointment of an agricultural officer and, later, a farm management officer.

The agency will have a budget for small development projects. For example, the fostering of the cottage industry skills that are recommended in Lord Shackleton's report will be financed from this source. The agency will also be responsible for work on expanding tourism, including the upgrading of existing tourist accommodation. I hope that it will be able to manage the proposed programme of grants and subsidies for agriculture. it will also handle negotiations with commercial interests who wish to invest in the islands. There may be some scope for joint venture activity.

I referred a moment ago to the purchase of land. As my right hon. Friend said in his statement, we have concluded that a gradual approach to land transfer will be best suited to the islands' present capacity. I know that Lord Shackleton's team gave a lot of thought to the best way to ensure that agricultural profits were re-invested in the islands. Their conclusion was that this could best be achieved by ensuring that the bulk of the land owned by absentees is transferred to local ownership and broken up into smaller units.

That is not necessarily either the best or the only way of dealing with the problem as Lord Shackleton identified it. It should, for instance, be possible to achieve the same objective by fiscal means. I also know from my own discussions on the islands that many of those who are involved in farming have real doubts about the proposals. The question is whether the islands include enough people who are ready to farm on their own to cope with a large-scale programme of land purchase and sub-division at this stage. Sub-division itself is not necessarily easy, as the quality of the land varies. Whereas it may be easy to find someone who would be happy to take on the best one-third of a large estate, that still leaves the problem of who will take on the worst two-thirds. The reason for not trying an experiment of that type is that one can see in advance that it is unlikely to succeed. [Interruption.] Of course, the experience of the right hon. Member for Battersea, North (Mr. Jay) was always different.

Mr. George Foulkes (South Ayrshire)

Will the Minister give way?

Mr. Onslow

No, I shall not.

I was also told that there are some people who are ready to take up the challenge. Indeed, those who bought sub-divided plots from the earlier experiments at Green Patch and Roy Cove are, by all accounts, making a go of it, despite the recent difficulties. I was glad that my hon. Friend the Member for Dumfries (Sir H. Monro) was able to see that for himself. Nevertheless, it is too early to be sure about the success of those experiments. It is also too early to be sure how many people will wish to emigrate to the islands to try their hand at farming smaller units.

Meanwhile, there is evidence that many farm employees are apprehensive about the prospect of wholesale sub-division. It would drastically reduce the scope for the employment of wage earners in farming. Moreover, many of the present farm managers and employees also fear that sub-division would ruin the social benefits of the present pattern of settlement. It must also be recognised that some, and I stress some, of the absentee-owned farms—those of the Falkland Islands Company for example—are among the most efficient and productive on the islands.

Against that background, we have concluded that we should approach the issue by enabling the Falkland Islands Government to purchase land that may become available on the open market. The new development agency will be empowered to carry out that work, but if a suitable property becomes available before the agency is set up, and if we can agree on an acceptable price, it will of course be possible to go ahead forthwith.

Mr. Eric Ogden (Liverpool, West Derby)

What land is available now?

Mr. Onslow

The hon. Gentleman is not telling me anything that I do not know. Land-holding is only one aspect of Lord Shackleton's proposals for improvement in agriculture. He also recommends—we have accepted the recommendation—the introduction of a system of agricultural grants and subsidies. They should be geared both to helping farmers who may take on sub-divided units that become available and to encouraging existing farmers to improve their land, whether it be by reseeding, the introduction of electric fencing, shelter belts, improving breeding stock, or investing in new machinery or buildings.

The appointment of an agricultural officer is a priority so that he can get to work—helped, as necessary, by the expert staff of the grassland trials unit. The report also proposes a major expansion of the work of that unit. The name is somewhat misleading and we are discussing a more accurate title with the Falkland Islands Government and the members of the Shackleton team. The unit is essentially a research station that covers all aspects of Falklands agriculture. Steps are now in hand to recruit more specialist staff and to replace and expand the unit's equipment. We shall discuss with the Falkland Islands Government how best to provide more land for experimental work.

I shall now deal with fisheries. Discussions with the European investment bank about funding the next stage of work on the prospects for salmon ranching are now at an advanced stage. I expect further work to take place in the islands before the end of the Falkland summer season. I hope that commercial interests will examine the possibility of participating in that work as it develops. My right hon. Friend's announcement also covered the need for a survey of the prospects of development of shellfish and other inshore resources. We are ready to fund a practical study.

The Shackleton report also recommends that Government funds should be allocated for offshore trial fishing projects. We have taken the view that if these fisheries are worth developing, commercial companies will come forward with proposals. Foreign freezer-trawlers have fished from time to time in the waters around the Falklands and continue to do so. But hitherto there has been no concerted effort to develop fishery resources for the benefit of the islanders. I am pleased to say that we have now had approaches from a number of British and foreign firms interested in exploiting the offshore waters, which include self-financing proposals for trial fishing. Realistically, proper development of these resources can only be achieved when protected fisheries are exploited under licence, and the Shackleton report advocates the establishment of a 200-mile fisheries limit to achieve this.

Even before the Argentine invasion, and leaving aside the problem of sovereignty claims over offshore waters, the major constraint on declaring such a limit was the high cost of establishing an effective policing arrangement, such as we have in British waters, when viewed against the level of potential benefits from licensing and conservation. The problem is obviously more difficult, given the current Argentine posture. Our forces in Falkland waters, while well able to carry out their military tasks within the 150-mile protection zone, are not suitable for conventional fisheries policing and protection duties because these would require the stationing of a large number of offshore patrol vessels with a boarding capability. To do this would deflect from the primary role of the frigates and destroyers deployed.

We shall therefore need to look carefully at other ways in which the need for fisheries surveillance and protection can be met to provide a commercially acceptable proposition before we contemplate the establishment of a fisheries limit, whether of 200 miles or 150 miles. I can assure the House that we shall continue to study this question and I hope that it will not be too long before we can come to some conclusions.

Lord Shackleton's team considered some aspects of the islands' infrastructure which are in need of urgent attention. I shall deal first with port facilities. Those who have visited the islands—I see some of them here today—will know that only one of the Port Stanley jetties is even adequately serviceable. There is clearly a requirement for a new multi-purpose jetty. The precise location and design needs to be based on a professional survey, and we are ready to engage consultants for this. I hope that they will be able to undertake the field work within the first three months of next year. Their studies can embrace the wider prospects for improving harbour facilities so that blueprints will exist should further commercial development seem justified. In the shorter term, I am confident that it will prove possible to proceed with a new jetty, and I hope that the construction phase can commence in the 1983–84 summer. We have estimated that this might cost up to £7 million.

Mr. Robert Banks (Harrogate)

Will my hon. Friend give way?

Mr. Onslow

I am sorry. [Interruption.] I hope that my hon. Friend will not expect me to make an exception in his case, however many times he chants "Krill" from behind me. I apologise. I have taken over half an hour already. I still have a lot to say. I am sure that my hon. Friend, in his turn, will be able to put his point of view.

Mr. Foulkes

On a point of order, Mr. Deputy Speaker. Is it in accordance with the normal practice of the House for a Minister to read through a prepared text and to accept no points from hon. Members on either side? Is not that totally against the standard practice described in "Erskine May"? Although the Minister would have us believe that he knows a great deal more about the Falklands than Shackleton, does not the fact that he has to stick so carefully to the prepared text indicate otherwise?

Mr. Deputy Speaker (Mr Paul Dean)

The House knows, I think, that any hon. Member can use copious notes. It is for the hon. Member who has the floor to decide whether or not he gives way. I suggest to the hon. Gentleman that he does not push his luck.

Mr. Onslow

Until you said that, Mr. Deputy Speaker, I was about to say that the House looks forward to hearing the hon. Gentleman. I am not now sure whether he is likely to catch your eye to make the speech that he has written himself, or in which he will be quoting someone else. I wish to continue to give the information that I believe the House has a right to expect and in a fairly precise form. It seems to me unreasonable to expect Ministers to come to the House and to improvise on the basis of their knowledge when the House wants, needs, and will have, as a record, a reasoned, clear and coherent statement. I hope that I have tried to give the House just that.

The Shackleton team also envisaged work on an improved road network. I have spoken earlier about remedial work around Stanley. Beyond that, we expect the islands' public works department to continue work on the partially constructed road from Stanley to Darwin. In the light of progress, we shall be prepared to consider engaging a contractor to complete it. Otherwise, we are not convinced that the case for a much more elaborate road network is yet made. There seems little prospect of enough traffic to justify the investment, while maintenance costs would be a heavy burden on the Falkland Islands Government. I am sure that some hon. Members have seen for themselves the state to which the existing stretch of the Darwin-Stanley road has been reduced by the severe traffic on it. Before there is any commitment to expenditure on additional roads, there needs to be more work on the other possibilities for communications between the main settlements by sea and in particular by air.

The programme outlined by my right hon. Friend provides for work on public utilities, including the water supply, power supplies and sewage system in Port Stanley and the telephone system across the islands. These were not specifically in Lord Shackleton's recommendations, although he did press for further work on alternative sources of energy. We need to consider the islands' needs for the next 15 years or so taking account of decisions on the location of the garrison and the new airfield, both of which may be customers for facilities developed by the Falkland Islands Government. Both are matters primarily for decision by the Ministry of Defence.

As a result; of this development programme and the impact of the garrison on the island economy there will obviously be a need for more skilled and enterprising men and women on the islands to respond to a wide variety of opportunities. At present, practical considerations, in particular the severe shortage of accommodation in Stanley, impose an inevitable constraint on immigration. As the new housing becomes available for occupation, it will be allocated by the Falkland Islands Government according to the priorities they are drawing up. Meanwhile, a large number of applications for immigration have been received.

All the applicants have been asked to complete a detailed questionnaire. More than 280 of these have so far been returned. The Falkland Islands Government are responsible for immigration into the islands. They hope to establish an office in London early next year and this will have as a first priority the task of identifying suitable settlers from among the many who have applied.

My right hon. Friend chose his words carefully on 8 December when he said that the Government were ready to support action by the Falklands Government in specific fields. The future of the Falkland Islands depends not only on the commitment of Her Majesty's Government to their economic development, and their physical security, of which there can be no doubt. It depends, too, upon the commitment of existing businesses, such as the Falkland Islands Company, and new enterprises, such as the Standard Chartered Bank. Here, I would say that I have no doubt of the extent to which the management of the Falkland Islands Company is committed to playing a constructive role in the development of the islands' economy.

But money is not all. The success of our plans depends, above all, on the commitment of the islanders themselves, in their Government and at large, in Port Stanley and in the Camp, to join in building a secure future for themselves and their children. I need hardly remind the House what resolve the islanders have shown in the past. There may be occasional disagreements about priorities, or differences of opinion about individual ideas in the years ahead. I believe, however, that we are all agreed about the aim we share. Even if there is much hard work still to be done, I am confident that, together, we can achieve it.

5.28 pm

Mr. Clinton Davis (Hackney, Central)

The whole House will appreciate the Minister's wide-ranging speech. It is regrettable, however, that the hon. Gentleman did not give way during his remarks to anyone other than myself. There are a number of points that trouble hon. Members, some of whom may be fortunate enough to catch your eye, Mr. Deputy Speaker, and others who may not. In a debate of this kind, some interrogation of the Minister can be helpful. I do not wish to be too uncharitable at the beginning of the debate. The Minister did the House a service in ranging over many points. He has emphasised the work of rehabilitation undertaken since the fighting. All hon. Members will wish to pay tribute to those concerned in that work—the Services, various arms of Government here, and not least the islanders themselves. All have undertaken these tasks with great determination and dedication, and deserve the congratulations of the House.

I join the Minister in his tribute to Lord Shackleton and his colleagues for their unanimous report, a work of great scholarship which presents many clear, positive and imaginative proposals. The Government have been inclined to accept only some of those proposals, and I will say something about them later on.

After their failures, blunders and inconsistencies during the past year, which contributed substantially to the crisis from which we have emerged, it is clear that the Government must play a significant role in building a better future for the Falkland Islanders. That will require a fresh and radical approach, and in that respect the Government have to a substantial extent been found wanting.

The House will have been concerned to note that the Minister has reserved for his winding-up speech my point about the funding of the programme, because an apparent inconsistency needs to be cleared up. On 8 December, replying to my right hon. Friend the Member for Lanark (Dame Judith Hart), the Foreign Secretary said: the new aid for the Falklands will be financed mainly from additional funds. No existing commitments will be cut to pay for it."—[Official Report, 8 December 1982; Vol. 33, c. 864.] However, when my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) asked the Minister for Overseas Development to which Vote the £31 million reconstruction programme would be charged, the right hon. Gentleman replied: The £31 million programme for the economic and social development of the Falklands Islands will be charged to the Overseas Aid Vote".—[Official Report, 21 December 1982; Vol. 34, c. 424.] I sense that my hon. Friend would have liked to question the Minister further about that.

It is not entirely satisfactory that a point of such fundamentally important principle should be left to the end of the debate. The Minister will probably have about a quarter of an hour in which to wind up. He may find it very difficult to give way then, and he may find it very convenient not to give way in order to answer a point which will undoubtedly trouble many of my hon. Friends.

Mr. Onslow

I shall explain the situation to the hon. Gentleman in precise terms. The new aid for the Falklands will be financed in the main from additional funds to be added to the public expenditure allocation for the aid programme, with the balance found from the unallocated portion of the aid programme. As my right hon. Friend made clear on 8 December, no existing commitments will be cut to pay for the aid. Estimates placed before the House for the Overseas Aid Vote for future years will reflect these plans, and, if necessary, supplementary provision will be sought for the present year.

Mr. Davis

That explanation is better than nothing, but it will worry many of my hon. Friends. The funds for the overseas aid programme are meagre enough; we wonder about those "unallocated" funds. I hope that the relevant Select Committee will want to investigate this matter further. I am not entirely satisfied with the Minister's explanation, although in fairness one must reflect upon what he has said.

Mr. Frank Hooley (Sheffield, Heeley)

The Minister's reply is not consistent with what the Secretary of State said. The Secretary of State spoke of additional funds. The "unallocated" funds to which the Minister of State referred are not additional to the aid programme. They are funds within the aid programme that happen not to have been apportioned to any particular project, so there is a clear contradiction between the assurance given by the Secretary of State and the words of the Minister of State today.

Mr. Davis

My hon. Friend is absolutely right. The Minister will have to be rather more categorical in winding up than he was just now to clear up the continuing ambiguities. The Minister's speech was largely—and significantly—lacking in any general survey of the Falklands in wider international terms. The problems of the Falkland Islands cannot be considered in a vacuum.

As I perceived on my recent visit to Central America with the hon. Member for Sevenoaks (Mr. Wolfson), throughout Latin and Central America there is considerable support in principle for the Argentine case for sovereignty, although it is tempered by disapproval of the Argentine Government, the stupidity of their actions and their resort to force. There is also far deeper resentment of the United States' actions than of our own. Most Latin Americans regard it as perfidious in the extreme for the United States to have sided with us against Argentina and hence, they feel, against Latin America. The recent and often clumsy attempts by the United States to mend its fences in this respect, although they have certainly upset the Prime Minister, should not, therefore, have been unexpected.

A further direct consequence of the Falklands war which cannot be ignored is the dangerous arms race that has ensued since the war ended, with its inevitable importance in its effect on the proposals outlined by the Minister. In part, although it is by no means the whole story, this may be based on the belief of some Latin American countries that what happened to Argentina must not happen to them. It was cogently put to me yesterday by my hon. Friend the Member for Newham, South (Mr. Spearing), who has had many discussions on this at the United Nations and elsewhere, that there are simply too many avid buyers of arms and too many avid purveyors of arms in the area.

When one considers the scale of deprivation that blights the lives of so many people in that subcontinent, who desperately yearn for clean water supplies, decent housing, protection from disease and help in their desperate struggle against hunger, the arms race becomes even more obscene. I believe that the Government should—a Labour Government certainly would—use every possible sinew to stop this. Although the likelihood of an imminent invasion of the Falklands by Argentina is remote, Argentina's efforts to restock its depleted supplies and the corresponding threat to and continuing harassment of the Falklands can undoubtedly impair the efforts that we all wish to see made to bring new hope to the islanders.

Accordingly, I believe that it is incumbent on the Government to do their best to defuse the tension and to be seen to be prepared to examine political solutions capable of bringing the islanders far greater security than we can ever offer in isolation—a security backed by international acceptance, perhaps through some new form of United Nations trusteeship. I do not wish to spell that out now, but the Government must remain open to new ideas to reduce the continuing tension.

If we are thought to be too rigid and unyielding, I fear that we shall continue to lose support from our friends who, during the crisis, portrayed remarkable solidarity with us. There is a real danger, as we saw following the debate on 9 December in the General Assembly of the United Nations, that some of our friends are losing patience with us. Perhaps it is because they have felt that the Government seem to be adopting too rigid a posture, which is unacceptable to them, and in the long term bad advice for us.

There is a need for the Government to consider one of the solutions that Lord Shackleton has adumbrated. I do no more than mention it in passing today, not out of disrespect to the proposal but because I, like the Minister, wish to deal with some of the specifics. Lord Shackleton has been at pains for many years to say that there is a need for the British Government to look for wider solutions, perhaps along the lines of internationalisation of the Antarctic, where there is already an international regime. That is the one place in which the cold war, as he put it, is not intruding.

Another problem is the schizophrenia of the Government, which has been reflected particularly in the past few days. During the crisis, the Prime Minister vigorously and rightly, albeit somewhat tardily, denounced the arbitrary arrests, disappearances, torture and murders in Argentina. The hon. Member for Essex, South-East (Sir B. Braine) has played a notable part in denouncing these over the years, and I have paid tribute to him before. Many of my hon. Friends had been denouncing that tyranny for rather a long time.

Now, in a desperate search for friends, the Prime Minister seeks an accommodation with Chile, where the record of arbitrary arrests, disappearances, torture and murders is at least as bad as and probably worse than that in Argentina. She should explain this schizophrenic approach.

A few weeks ago the Prime Minister was shrill in her denunciation of the French for resuming Exocet sales to Argentina. However, last Monday she was prepared to accept, no doubt for the best of pragmatic reasons, British banking support for Argentina. She asserted, somewhat naively: These loans are not for arms purchase, but are to help Argentina to continue paying its debts".—[Official Report, 20 December 1982; Vol. 34, c. 352.]— as though an economically strengthened Argentina is not much better able to increase its supplies of weapons. That also requires some explanation from the Minister. All this does not help to sustain the credibility of this country in its search for a lasting peace.

From that background I turn to the specific conclusions of the Shackleton report and the proposals that it offers. One of the most significant conclusions reached by Lord Shackleton is that, since the period when the information was garnered for the first report, the economy of the Falkland Islands has seriously declined. It is appreciated that there has been a world recession that has made a serious impact on the Falkland Islands, as on virtually every other country. This has contributed to the fall in the price of wool and to the fall in wool output, but that is not the whole story either.

There has been continuing depopulation of the Falklands and there is a grave danger that within five years there could be an economic collapse. An important assumption on which the report is based can be seen in paragraph 4.1 of section 2, which says: we presume that as a planning objective, a Falklands community with 1,000 or less, defended by a garrison of 3,000 or more, surviving economically principally because of income from stamps, is unacceptable. In part, and only in part, have the Government grasped the reality of that statement. The purpose of Shackleton is to produce positive recommendations to exclude that gloomy prospect.

The Minister disputed the assertion in the report that regular civil air communications are an absolute priority. There are great difficulties in establishing any long-term civil air communications, particularly when one has regard to the need to avoid Argentine air space and Argentine air traffic control. However, I cannot understand how the Minister can dispute that proposition for the long term.

Civil air communications, to be viable, must have a link with the mainland. We want to know what the Government's long-term thinking is, what are the possibilities and who is likely to grant these links. Will they be with Montevideo, Rio de Janeiro, Punta Arenas? What overtures, if any, have been made by the Government and what has been the response? It is not enough simply to say that air communications are not necessary and are something we can do without because we have good shipping links. That is not the answer, because the survival of the Falkland Islands depends substantially on effective communications.

The Minister adopted a very tentative view about the problem of land reform. It is particularly regrettable that the Government's response has been, at the very least, to side-step the most critical of the recommendations in the Shackleton report—or are they simply ignoring it? The point was made by the Shackleton report over and over again—this is a unanimous conclusion and one that has been accepted by the Falkland Islands Council—that the very survival of the islands depends upon tackling the problem, yet the Government seek to avert it.

My hon. Friend the Member for Hamilton (Mr. Robertson) and I have had the advantage of seeing a submission that has been made to Sir Rex Hunt by Mr. Colin Smith, who is a shareholder of two and a director of two more medium-sized firms on the islands. He is a marketing agent for all the independent farms and has a lifetime's experience in sheep farming.

Mr. Smith has pointed out very cogently how the problem of a declining and ageing population, especially in the Camp, has led to a crisis on many large farms, with a labour force retiring and not being replaced by young people in similar numbers. It is a problem aggravated by the need for more labour to repair the war damage about which the Minister was talking, and by the drift of people into providing services for the garrison and other developments on the islands.

All this represents the single greatest reason for land reform. There is no alternative to subdividing the land. Lord Shackleton expressed that point of view very clearly when he was cross-examined by the Select Committee. In his view, there is no alternative. It is necessary to provide far greater incentives for people to stay, buy and husband land and also to attract newcomers than the Minister has begun to adumbrate to the House today.

The conclusion reached by Lord Shackleton, supported by Colin Smith, is that, to halt and reverse the decline of population, it is essential that there should be created a large number of family farm units owned freehold or by tenancies by families who are committed to the land that they own and the future of the islands in which they live. The Government reject that. It is odd, because I always thought that they were in favour of that sort of thing for council housing in this country. They will have to explain that inconsistency, too.

Lord Shackleton recognises that there is an urgent need to attract young skilled people from the United Kingdom, Australia and New Zealand who with financial help can respond effectively to the new challenges presented in the Falkland Islands. However, the Government shirk this challenge. It requires a radical approach to deal with the almost feudal system that prevails in the Falkland Islands. There can be little doubt that the profit system as undertaken by the Falkland Islands Company has been pretty unprofitable to most people other than the Falkland Islands Company. Lord Shackleton is absolutely right on this matter. After all, he has considered the matter in two reports. He has not found it necessary to budge from the initial conclusions that he reached in the first report. He believes that the ubiquitous and pervasive influence of the Falkland Islands Company has to be tackled urgently and decisively.

The reasons that have been cogently and explicitly stated in the report can be summed up as follows. Although the company over the years has played a significant role in developing the economy of the Falkland Islands, what are the basic facts? The company owns 43 per cent. of the land—an excessive concentration of ownership by any standards. It employs one-third of the work force. It owns about half of the 600,000 sheep on the islands. It provides all the shipping to the Falkland Islands. It owns the main retail outlet. It is a monopoly that would offend, at least until today, virtually every tenet of the Monopolies and Mergers Commission in the United Kingdom, although any recommendation might be overturned by the Minister for Trade. In addition, the company imposes grotesquely antiquated conditions of employment. The Guardian of 22 July referred to some aspects of that. It stated: islanders who have accepted the FIC's average salary of £3,300 per annum have signed a contract in which they pledged themselves to be placed 'under the orders of the company's general or Stanley managers or their deputies for the time being and to faithfully and diligently perform whatever duties during whatever hours as shall be assigned to them.' That is standard stuff in the draft of leases or service contracts. Now I come to the reality. The Guardian reports: Further, the FIC employee has also agreed that '… if his wife or any member of his family shall be guilty of any act which shall be prejudicial to the interests of the company …' he shall be sacked. And to complete the picture the probability is that the employee, especially if he works on camp … will have to shop at a store which is owned by the FIC and whose shelves are stocked by the ship which visits the Falklands four times a year and is chartered—inevitably—by the FIC.

Mr. Onslow

The hon. Gentleman refers to the malign influence of the FIC, but I wonder how he reconciles it with the figures on page 122 of the Shackleton report. They show that the total number of farm employees in the islands as a whole decreased by 8 per cent. from 1975 to 1981. During the same period, the total number of employees on the FIC's farms increased by 8 per cent.

Mr. Davis

The Minister is being unduly naive. One of the great things about the FIC is that it has good selectors of land, and it acquires it. Coupled with that there have been few incentives to the smaller farmers to cultivate the land and husband it. That is part of the explanation of the Minister's question.

Why does not the Minister, while he is on that point, quote something about the repatriation of profits? Undoubtedly the FIC has taken more from the islands than it has put in. Private landlords invested only £700,000 and repatriated profits of £1.1 million, as is cited in the report. Of course, it must be more attractive to repatriate money for absentee landlords and overseas disinterested investors than to invest in the precarious business of farming in the Falkland Islands. I remember something that was said in the bank rate tribunal, that it may not necessarily be patriotic—

Mr. Denis Healey (Leeds, East)

"It may be derogatory to sterling, but it makes good sense to me."

Mr. Davis

My right hon. Friend's memory is more effective than mine.

The serious point about this matter is that there is a terrible drain on the small population. It is unacceptable that in the new Falklands that position should be allowed to endure and the FIC should be permitted to benefit unduly from the enhanced land values that will flow from the improved infrastructure on the islands, which the Government are providing with public money.

As was reported in The Observer not long ago, one of the only islanders to be expelled by the invaders, Mr. Bill Luxton, who owns 150,000 acres of sheep grazing and is happy to adopt the Shackleton proposals, has said: The end was in sight for the old life anyway. That must be true. New opportunities need to be created. Shackleton calls for the subdivision of land—not for the break-up of all the big farms, but for the break-up of those held by the FIC.

There is evidence, which the Minister only grudgingly accepted, that subdivision leads to a substantial increase in production and productivity. We would dispute most strongly the assertions by the Minister that such policies would not be consonant with the wishes of the populace. There is ample evidence from the findings of Lord Shackleton. The Shackleton team saw many people. That matter was discussed with many people on the islands.

Mr. Onslow

When was that?

Mr. Davis

In the period leading up to the report. I am happy to say that I can quote from the evidence that Lord Shackleton gave on Monday 6 December to the Select Committee on Foreign Affairs. He said: We talked to a lot of people, a lot of shepherds and others, and said, 'Would you like to run your own farm? Do you think you could?' We got surprisingly positive answers. But the extent to which they are able, or will be able, to branch out on their own, if I may say so, brings up the whole question of the ownership of the farms and the speed with which it is done, the education system, the training and these sorts of things. We were confident enough to make a recommendation. That is the evidence of Lord Shackleton. I happen to prefer it in that respect to that of the Minister. There is evidence not only from Lord Shackleton. Mr. Gavin Young carried out intensive investigations for The Observer. He said: I also found young and middle-aged farmworkers in favour of land reform—many want to buy and farm their own land. So are people in Stanley in favour of it. So is Sir Rex Hunt, the Civil Commissioner. I would have quoted Mr. Terry Peck in The Guardian on 22 July if I had remembered to bring the quotation with me.

The Opposition believe that those are correct assessments of the situation. We believe that the company's cosmetic proposals to lease some of its small islands or to share in the farming of some of the poorest and least manageable areas while remaining in a position of dominance of the agriculture and economy in the Falklands are unacceptable. The Government's timidity is unacceptable. Their attitude towards the Falkland Islands Company reminds me of a telling phrase of Nye Bevan about another Government when he said that their approach was like that of an old man approaching a young bride—fascinated, sluggish and apprehensive. On this issue it might be said that the Government seem to have lost the will to be apathetic.

Do the Government believe that the company's activities represent an incentive to the present population? Does it provide sufficient inducement for skilled workers from overseas? Are the meagre measures which are postulated by the Government likely to stem the population loss and solve the islands' economic problems? Unfortunately, I believe that the answer is likely to be in the negative. The truth, I suspect, is that the Tory Government are ideologically incapable of taking the radical action required. it was well summed up in The Times of 14 September: Men died in their hundreds, ships were sunk, and aircraft lost, not to protect a company dividend, but to rescue the way of life of a community which had been violated to the depths of its spirit. That response was the right one rather than the one that we heard from the Minister today.

6.1 pm

Mr. Julian Amery (Brighton, Pavilion)

Lord Shackleton and I were lucky enough to represent the ancient and famous borough of Preston together for many years. Despite obvious party differences, I came to have the greatest respect for his integirity, wisdom and common sense.

Mr. Foulkes

Here comes the Exocet.

Mr. Amery

I read Lord Shackleton' s first and second reports with great respect. I shall elaborate on them later.

There is one point only of the speech of the hon. Member for Hackney, Central (Mr. Davis) that I want to take up. He spoke of his visit to Latin America and the need to improve our relations with those countries. Almost in the same breath, he talked about Chile's disregard for human rights. We want to improve air communications with the mainland of South America, and the Argentines are still reluctant on that point. Chile is the only other country that it is possible to consider in this respect and we had better make up our minds whether the economic or the human rights consideration is to take the upper hand.

I want to congratulate the hon. Member for Hackney, Central for not speaking against the cost of the Shackleton proposals, unlike a large number of newspapers stretching from The Guardian to The Financial Times. The House has to face their widespread criticism, although the hon. Gentleman was careful not to give expression to it. Bernard Shaw said: How incapable must one be of learning from experience. By God, he was right. The basic lesson to be learnt from the Falkland crisis is the cost of not implementing the Shackleton proposals mark 1. If we had built the airfield that he recommended, which would have cost about £9 million in those days, I do not believe that there would have been an invasion. If we had implemented other parts of his plan, private enterprise would have had confidence in the future of the Falkland Islands.

The hon. Gentleman rightly raised the subject of land reform. I am attracted by the idea, but one of the reasons why the Falkland Islands company repatriated so great a proportion of its profits was that successive British Governments, both Labour and Conservative, left the future sovereignty of the islands, and thus the status of the company, in doubt. If one wants the company to re-invest in the island it must be confident that the existing status will continue. The same is true of new investors.

A long time ago, when I was at the Foreign Office, Lord Greenwood of Rossendale—Tony Greenwood, a friend of many of us—came to see me on behalf of an oil company of which he was a director. He wanted a licence to prospect. He was deterred by the uncertainty of the Foreign Office as to the islands' future status. Although I encouraged him to go ahead it was understandable that his co-directors did not want to.

If we had implemented Shackleton mark 1, the effect upon the Argentines could have been decisive. If they had seen that we were determined to develop this little archipelago I believe that they would have hesitated to attack us. It emerges clearly from General Galtieri's interview with the Italian lady, Miss Orlanda Forlucci, that he did not believe that we would try to take the islands back. The expenditure proposed in Shackleton mark 1 would have been about 1 or 2 per cent. of what we had to spend to take the islands back. That is the lesson that should be learnt by both sides of the House.

It is extraordinary how we could forget that a failure to spend money on defence led us into the First and Second World Wars. Both parties tripped up, but a little more expenditure on defence before 1914 and 1939 could have prevented the disasters that came later.

Some of the critics of the Shackleton mark 2 proposals, notably in the Financial Times but in other journals as well, have asked whether it is worth spending that amount of money on these little islands. That is an eighteenth century old colonialistic view. Do we judge the amount of money we spend on a bit of British territory by what we get out of it? That is not the line we take with the Outer Hebrides or other adjuncts of the British Isles. The Falklands are British islands. They may be 8,000 miles away, but it is a rather flat-earth philosophy to say that because of that we must regard them as foreign. They are not. They are stocked by British people. They have been British for a long time. Why should we look on them as foreign in an age when the world has shrunk? Eight thousand miles is not so important, as the Ministry of Defence was able to show.

Mr. Tam Dalyell (West Lothian)

The right hon. Gentleman mentioned the Outer Hebrides. Does he recollect that the Labour candidate in the Outer Hebrides, Brian Wilson, sent the Prime Minister a telegram when they heard of the resources that were being made available to the Falkland Islands saying "Send Shackleton here"? There are many areas in Scotland, the north of England, Wales and elsewhere where people are desperate for resources of one-tenth of this order.

Mr. Clinton Davis

Hackney and Hamilton.

Mr. Dalyell

Yes, Hackney and Hamilton, too. People are desperate for some kind of investment when we have such unemployment. It a ludicrous position.

Mr. Amery

Lord Shackleton is no longer in the Gallery, but I am sure that the point will not be lost upon him.

When we talk about whether it is worth spending that kind of money on the islands, we must remember that we are under an obligation to do so because they are British islands.

I was partly responsible for them as Under-Secretary of State for the Colonies and later at the Foreign Office. I believe that we owe them a debt of reparation because we failed to defend them, for various reasons that will no doubt appear in the Franks report. Because of our failure to defend them, we are under a greater obligation to repair the neglect. Of course we fought to liberate the Falkland Islands but that does not mean that we should return to the previous state of affairs. I hope that we have it in our hearts to make the Falkland Islands a better place to live in.

Self-interest also plays a part. There is great wealth to be developed in the South Atlantic. In addition to fishing, there may be oil and minerals in the sea bed. We should seize the opportunity, particularly during a world recession, and try to create new wealth in that part of the world. The Shackleton plan mark 2 would give the private investor the confidence—as long as the Government find it possible to accept the proposed infrastructure—to develop those resources. That would show Argentina that it may be worth while co-operating with us. However, we should make it clear that we are there to stay.

I should like to look beyond the interests of the islands alone. I do not believe much in handing over our responsibilities to the United Nations. It is not a responsible body for that purpose. However, to be realistic, the Falkland Islands could be the gateway to the Antarctic, just as Aberdeen is the gateway to the North Sea. Brandfield, Ross, Scott and, of course, Lord Shackleton's father were among the pioneers of the first generation. The "Discovery" team then carried out investigations. Today, the British Antarctic Survey is there. We have extensive territorial claims to the Antarctic continent, which have been marked out since 1907 or 1908. We do not know exactly what the resources are, but they may be great. Like the Soviet oil under the permafrost, they will be difficult to exploit. However, in an age in which people talk about colonising space and men land on the moon, we should not shrink from that challenge, although it would be expensive.

If multinational companies are to invest capital in trying to exploit the Antarctic's resources they must be sure that they have a good title to any concessions. In the summer, a conference took place in New Zealand on the future of the Antarctic treaty, which could expire after 1991. It is important to avoid the errors made in the treaty about the law of the sea and about the mineral resources of the sea bed. I am not offering a blueprint for action, but I can see an opportunity, and the Falkland Islands could be the hinge to it.

In my experience of diplomacy, a conflict can be settled in two ways. It is possible to concede the other side's point. Indeed, that is what my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley)—now Financial Secretary to the Treasury—tried to do in his ill-fated initiative over the Falklands in 1980. Alternatively, one can try to envelop the dispute within a wider framework. That is what has happened with the EC. We no longer hear about German claims to Alsace-Lorraine or about Italian claims to Corsica, Savoy and Nice. Those countries are both members of the same Community and Europe has enveloped or reconciled the claims within that wider framework.

Would that be possible in the South Atlantic? I cannot see why our interests and the claims of Argentina and Chile could not be reconciled in the following way. We have staked out claims in the Antarctic, and so have Chile and Argentina. The claims overlap each other. Could we not foresee a joint development based on our territorial claims, and welcome other countries to participate in the exploitation of the resources of the Antarctic? We would guarantee their legal rights. That applies in particular to the riparian countries on either side of the Atlantic and extends to Uruguay, Brazil, South Africa and, perhaps, Australia and New Zealand, which also have extensive claims in the Antarctic. Could we not all co-operate to ensure the security of the sea and air routes in the region?

Instead of harking back, as so many Opposition Members do, to trying to settle the sovereignty of the Falkland Islands, should we not look towards a broader horizon and think bigger? Our presence in the South Atlantic derives not only from the Falkland Islands, and their dependencies, and our claims in the Antarctic, but from St. Helena, Tristan da Cunha and Ascension Island. Surely we should establish that we have an important stake there. If we have rights, then we also have duties and responsibilities. Perhaps we could be the catalyst in the creation of a new dispensation. I do not say a new NATO, but I suggest a South Atlantic or an Antarctic community including all those with interests in the area. But the first step must be to implement a development plan for the Falklands. That is the launching point, the Aberdeen of the North Sea. Perhaps we are on our way to doing that. I pay a warm tribute to Lord Shackleton for his two reports and to the Government, because they are the first to try to do something serious about the problem.

6.18 pm

Mr. George Foulkes (South Ayrshire)

I am glad that I have caught your eye, Mr. Deputy Speaker, just as I was glad to catch Mr. Speaker's eye in the debate on 3 April 1982, when I spoke against sending the task force. I do not regret anything that I said then, although perhaps I could have put my view more forcefully and convinced more hon. Members of the lack of wisdom behind that decision.

Although many people were interested in, or to use the Prime Minister's words, "thrilled" by, the experience of war, few people, including hon. Members, the press, and particularly the newspaper that "backed our boys" seem concerned now about the future of the islanders. Fewer people seem able and willing to discuss the matter.

It is disappointing to see such a lukewarm and pathetic response by the Government to Lord Shackleton's excellent report. The Minister paid tribute to Lord Shackleton and said that he had done a good job, and then proceeded to reject the two most important parts of the report. As my hon. Friend the Member for Hackney, Central (Mr. Davis) said, the two key recommendations of the report that are essential to the future prosperity of the Falkland Islanders are the provision of a civil air route and the transfer of land ownership. Lord Shackleton confirmed the importance of those recommendations when he gave some helpful evidence to the Select Committee on Foreign Affairs. In relation to a civil air link, Lord Shackleton said: I do not see it in the immediate future but if there is no prospect of a civil air link we take a very gloomy view indeed of the future prosperity of the Falkland Islands.

The Minister, having paid great compliments to Lord Shackleton, then dismissed one of his key recommendations—the civil air link—and said that it is not so important after all because some ships are going. Lord Shackleton and his team conducted two careful investigations. With all their knowledge and experience, they said that the establishment of a civil air link was an "absolute priority". One could hardly express a recommendation more strongly. It is no use the Minister saying that his wisdom is far greater than that of the Shackleton Committee and its advisers. That does not convince me or many other hon. Members.

Lord Shackleton was in no doubt about the importance of his recommendation of the transfer of land. He told the Select Committee: It certainly is a key recommendation. About the Government, Lord Shackleton said: Unless they can produce some other recommendations which will have the same effect, then I would regard it as axiomatic … that the prospects of the Falklands would be a good deal less favourable than if they adopt these. Lord Shackleton made it clear several times to the Select Committee that the transfer of land ownership was essential. Again, the Minister dismissed the recommendation and said that there was no need to consider it. Just like the Minister for Trade, he overrules the experts who have taken the evidence, done the work and considered the matter and says that the recommendation is not important.

The sale of council houses, where a different principle applies, was mentioned earlier in the debate. One wonders whether political dogma causes the Minister to liken the Falkland Islands Development Agency to the Highlands and Islands Development Board, which was described by a former Conservative Secretary of State as "pure Socialism". Is it not political dogma that causes the Government to reject the recommendations? It will be a very sad prospect for the islanders' prosperity if the recommendations are not accepted.

Mr. Nigel Spearing (Newham, South)

Does my hon. Friend agree that one factor that has not yet been mentioned is the distinction between vesting and the break-up of larger farms into smaller units? Lord Shackleton's report was concerned about the effects of the transfer of profits; therefore, vesting is of crucial importance. Lord Shackleton advocated the break-up of farms not necessarily into very small units, but into matched units to meet the natural conditions and the abilities of those concerned.

Mr. Foulkes

As usual, my hon. Friend is quite right and I need not elaborate on what he said. Only four of the 36 farms on the islands are owner-occupied. Lord Shackleton put forward a good plan for the setting up of an agency to purchase the land and to transfer it to private ownership. The Minister should not regard that as "pure Socialism". If we give the islanders ownership of the land it will give them a stake in the future of the islands. I plead with the Government to reconsider their rejection of Lord Shackleton's second key recommendation.

My hon. Friend the Member for Hackney, Central also mentioned the outflow of money from the islands. That was one reason why Lord Shackleton suggested the transfer of ownership. A memorandum that we received in the Select Committee stated that, between 1970 and 1973, the farming companies returned 59 per cent. of after-tax profits to absentee shareholders in the United Kingdom. Eighty-six per cent. of the money retained was invested in United Kingdom and United States shares. Lord Shackleton said in evidence that he saw the transfer of ownership of land as vital and that unless the Government could come up with an alternative he saw a gloomy future for the islands.

The Minister said that the alternatives were fiscal methods, but he did not give us the details of those fiscal methods. I hope that he will do so when he replies. For example, is he considering the possibility of the Falklands Islands Government freezing all assets on the islands, refusing to authorise the transfer of funds out and forcing companies to reinvest in the islands? That would be possible. At present, the Falkland Islands treasury and the Falkland Islands Company act as bankers and transfer funds by cable. Is the Minister suggesting a lump sum tax on global profits in the Falklands Islands? Before the war, the profits of the Coalite Group in the year up to September 1982 were £25 million. If that substantial sum were reinvested in the islands, it would greatly help to build a secure future.

Mr. Ogden

I am no spokesman for Coalite, but there is a difference between Coalite's profits and the profits of the Falklands Islands Company, which are certainly not £25 million.

Mr. Foulkes

I accept that correction, but a substantial amount of money—

Sir Bernard Braine (Essex, South-East)

Where will it come from?

Mr. Foulkes

The Minister read from a prepared text, while I have only a few notes. The Minister had plenty of notice to answer the question about the origin of the money, so the hon. Member for Essex, South-East (Sir B. Braine) cannot expect me to answer that off the top of my head. I shall come to the hon. Gentleman in a moment.

The right hon. Member for Brighton, Pavilion (Mr. Amery) has gone now, but he talked in glowing terms about the future economic prospects of the Falkland Islands. If he reads the Shackleton report carefully, he will find that there is not as much optimism as he seems to imagine. The prospect of krill fishing is still very speculative. The Minister has already said that he is waiting for commercial fishermen to come forward, but why did they not come forward before? Will they come forward when there is still doubt about the future political stability of that area?

As to deep sea fishing, the Polish boats in the area do not need to land on the Falkland Islands. They are long-distance fishing boats and can return to their home ports. Alginate was mentioned in the report but was dismissed as not being a great possibility. The right hon. Member for Pavilion mentioned oil. My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) and others on the Select Committee will recall the dramatic evidence about the great difficulties in prospecting for oil in the South Atlantic because of icebergs and other natural hazards, and because of the political instability in the area. There is no sign of any real interest by oil companies in the area. There is a small amount of tourism ranging from a limited number of naturalists to the development of philately. The important area is agriculture.

Mr. Shersby

I thought I heard the hon. Gentleman say that there is no evidence of interest by oil companies in exploring the area. I draw his attention to the fact that before the conflict took place, the Argentine Government advertised oil concessions straddling the median line between Argentina and the Falkland Islands. Those oil concessions were of considerable interest to the oil companies, but were not taken up because of the protests by the British Government.

Mr. Foulkes

That was not the information given to the Committee, which was told that although the shelf around the mainland had been exploited, there was no great interest in the area around the islands because of natural hazards. In addition, political instability continues.

Mr. Dalyell

There is the small problem of icebergs.

Mr. Foulkes

I did mention icebergs. The main area of development is agriculture, which again depends on the transfer of ownership. However, the Minister has rejected the recommendations.

I have dealt with the economic future of the islands. I want to deal with their political future. It is necessary to explore this in detail. The Government should begin to swallow their pride and start discussions, either directly or through a third party, with Argentina. We make major loans to Argentina and supply Rolls Royce engines for West German ships that are sold to Argentina. It is crazy that we cannot discuss directly with Argentina the future of the islands to establish political stability in the area, thereby ensuring a secure future. That is by far the most important matter.

The hon. Member for Essex, South-East has a stubbornness and determination that is commendable on many occasions, but such stubbornness and determination in refusing to accept any kind of discussion, or any alternative to the proposition that the islands remain British in perpetuity, while meant to be helpful to the islanders, does them a great deal of harm. He led them to believe that Britain could for ever more continue to garrison, defend, look after, support and nurture these islands. That is not a realistic possibility. It never has been and never will be. We must come to that conclusion.

Mr. Amery

rose—

Mr. Foulkes

I mentioned the right hon. Member earlier, but he was not present. I have given way rather a lot and I would rather try to come to a conclusion.

We must take account of the islanders' views. There must not be a veto. The islanders cannot have an unlimited demand on the money of United Kingdom taxpayers in perpetuity. That is not possible. I am keen to discover what the islanders think. The Foreign Office said that it was relying on a questionnaire circulated by the Falkland Islands Council. I have a copy of that questionnaire, which among other things says: Should the Falklands be split into constituencies? Should candidates live in their constituencies? Should junior civil servants be allowed to stand? How much should full-time members be paid? How often should public meetings of Council be held? That is very interesting, but the Foreign Office is not addressing itself to the fundamental political problem of the future of the islands.

We must ask the islanders: "If the present United Kingdom Government, or a future one, are not prepared to pay hundreds of millions of pounds a year to maintain a fortress Falklands in perpetuity, what alternative are you willing to consider?" If we do not start talking to them along those lines, we shall lead them up the garden path up which the hon. Member for Essex, South-East and others have led them again and again.

I make two positive suggestions. We should ask the Government to use the good offices of some South American Governments who have sway with Argentina and with whom we have good relations, such as Peru, Mexico, Brazil and Venezuela, to try to begin exploratory discussions. We should re-examine parts of the Peruvian plan, which were accepted by many people but were rejected summarily by the Government during the discussions. It is inevitable that discussions will take place at some time, and better sooner than later.

My second suggestion, which I hope is constructive, is that a study should be undertaken by the Foreign Office, not just of United Nations trusteeships but of the agreement in 1921 by the League of Nations, governing the Aaland Islands in the Baltic. That agreement stated: The convention based on a decision by the Council of the League of Nations provided also that the Aalanders, who had in two plebiscites voted overwhelmingly in favour of Swedish sovereignty over the islands, should have far reaching internal autonomy and be exempt from Finnish military service". These Finnish islands have Swedish-speaking people living there. They are similar in many ways to the Falkland Islands. The people are farmers and have a great deal of internal autonomy. Some agreement along those lines could provide a possible solution for the future.

Conservative Members shake their heads. Unless we address our minds to these matters, the islanders will face a constant threat and be under a constant claim of sovereignty by Argentina. There is no future prospect of prosperity for anyone on those islands while that threat remains.

6.38 pm

Sir Nigel Fisher (Surbiton)

I hope that the hon. Member for South Ayrshire (Mr. Foulkes) will forgive me for not following the points he has made, because I want to be very brief. I know that many hon. Members on both sides of the House wish to take part in the debate, which started very late this afternoon.

The updated Shackleton report is so thorough and so comprehensive in its scope that any attempt to cover all or even many of its recommendations would entail a very long speech. Therefore, I shall confine my own remarks to the immediate as opposed to the long-term needs of the islanders.

In any event, the much wider matters, such as the potential of the offshore fisheries or of krill in the South Georgia area, or the even longer term oil prospects, are all dependent on reaching an arrangement with Argentina which, of course, must eventually be made but which is not feasible at the present time.

There are, however, some things which can be and should be undertaken as soon as possible in the interests of the islanders. The most expensive is the construction of a permanent and longer runway for better air communications. This is needed for civilian as well as military use. It will cost a lot of money, about £30 million, but it should be put in hand soon, if only because the life of the present shorter runway is only about three years.

I remind my hon. Friend the Minister of State that many of us have for many years begged successive Governments to construct a longer runway. It would have been much cheaper had it been done then rather than now.

Housing for the garrison is an even more immediate problem. The 1,800 islanders feel swamped and overwhelmed by the number of troops. That could lead to friction, especially if the lack of garrison accommodation is not remedied at an early date. About 500 Service men at present live on a ship anchored in Port Stanley harbour, but that can only be an interim arrangement. More permanent housing is urgently needed, but, so far as I know, no new building has yet been started.

Has a site yet been chosen? If not, why not? There is a good site near the airport, about 2½ miles outside Port Stanley, and construction work should be started very soon. Meanwhile, have prefabricated units been sent from England? If so, where and when will they be erected?

There is also a shortage of amenities, such as public houses and other buildings, where social life can be enjoyed, because most of the suitable buildings are at present in use as sleeping accommodation for the garrison.

Sewage is another serious problem in Port Stanley. I was glad that my right hon. Friend the Secretary of Slate for Foreign and Commonwealth Affairs referred to this in his statement on 8 December, though it is not specifically referred to in the Shackleton report. It is obvious that what was adequate for 900 civilians is quite inadequate for the 3,000 or more people now living in the area.

A new jetty in Port Stanley harbour is another urgent requirement. The present jetty can take only one ship at a time, and there is an immediate need for much better facilities for ocean-going ships. The building materials for housing the garrison are arriving very slowly because of the lack of proper jetty facilities. When I last heard, no fewer than 26 Merchant Navy vessels were waiting to unload, yet in his statement on 8 December my right hon. Friend could only say that the Government were carrying out a feasibility study. That implies a long delay. More urgent action is needed than the Minister implied in his speech.

Lord Shackleton estimated that the cost of the new jetty would be between £3 million and £3½ million, but its use would not be confined to military requirements. It will have a continuing value if the economy of the islands is to develop in the future, so this would be money well spent in the long term, quite apart from the fact that a new jetty is much needed in the short term.

Lord Shackleton also stresses the social problems. As all hon. Members are well aware, there is a serious shortage of young women in the islands. Lord Shackleton reports that in 1980 there were only 26 unmarried girls between the ages of 20 and 30 in the islands. The disparity has obviously increased due to the presence of the troops, and after a time that will almost certainly lead to friction between the military and civilian male population, however popular it may be with the girls.

There is a real need for female personnel in the garrison and for married male personnel to be accompanied by their wives. I appreciate that this would involve extra costs in moving and accommodating wives and other dependants and it underlines the housing requirements to which I referred earlier. Without more attention to these matters, there is bound to be continuing and increasing friction. I therefore ask the Government to give this a high priority in their planning for the future.

May I make one comment not directly related to the Shackleton report, but nevertheless relevant to this debate? It has just come to my knowledge that the special BBC transmissions to the Falklands are to be cut from three broadcasts of 45 minutes each a week to two broadcasts of 30 minutes each a week. Perhaps the Minister will comment on the reason and justification for that.

Lastly, it would be ungracious of me not to refer to my right hon. Friend's announcement that £31 million is to be spent on implementing part of Lord Shackleton's recommendations. That is greatly appreciated by the islanders. However, I hope that I shall not be thought ungrateful if I add that that money is very much overdue. The basic infrastructure has been neglected by successive Governments—no doubt because the population of the islands is so small—compared with what has been done in other colonial and ex-colonial territories. As a result, we shall now have to spend much more than would have been the case had we developed the Falklands, as we should have done, many years ago.

There is much to be done, and I am sure that it will be done. But its value will be doubled if it is carried out quickly and if the practical matters to which I have referred are given a priority place in the Government's plans.

6.48 pm

Mr. Russell Johnston (Inverness)

I shall touch on a number of matters raised by the hon. Member for Surbiton (Sir N. Fisher). However, like all hon. Members, I compliment Lord Shackleton on the careful work that he has done. I also congratulate the two staff members of the Highlands and Islands Development Board on the part that they contributed to that work.

Before coming to the main burden of my speech, I should like to refer briefly to two brief aspects of the report. Everyone agrees that communication is vital. It was therefore disappointing that the Minister felt unable to say that the Government have been able to match the rapidity with which Lord Shackleton completed his report in arriving at a decision on what to do about communication. Unless the islanders can have an assured method of communication that does not depend on an unstable and possibly temporarily friendly country, I do not think that we shall achieve a permanent solution.

It is also regrettable that the Minister gave such a hesitant response to Shackleton's proposals for land distribution, in respect of which I register my support.

Many hon. Members have said that the report is not new, that we had a report in 1976, and that this latest one merely updates it. But, of course, nothing was done in 1976.

During the conflict there was a long article in The Observer. It drew attention to the questioning of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), the Financial Secretary to the Treasury, after his statement to the House on 2 December 1980. This matter was referred to obliquely by the hon. Member for South Ayrshire (Mr. Foulkes), in the remarks that he addressed to the hon. Member for Essex, South-East (Sir B. Braine). The Observer suggested that the criticisms to which the Minister was subjected on that occasion torpedoed an agreement and therefore contributed enormously to the final conflict.

I want to rebut that and to state firmly that, two years on, I take back none of the basic questions that I asked on that day. I shall quote them so that the matter may be quite clear. The questions were echoed by hon. Members on both sides. I asked: Is the Minister aware that … there is no support at all in the Falkland Islands or in this House for the shameful schemes for getting rid of these islands which have been festering in the Foreign Office for years? Will he take this opportunity to end speculation once and for all by declaring quite clearly that he disowns these schemes and that he will work to improve the economic and political links between the United Kingdom and the Falkland Islands? Surely that is the way to end the emigration about which he talked earlier."—[Official Report, 2 December 1980; Vol. 995, c. 130.]

Sir Bernard Braine

The hon. Gentleman will recall that on that occasion the Minister was questioned by no fewer than 18 hon. Members from both sides of the House, each of whom was hostile to the proposal that the Minister put to the House—as, indeed, the Falkland Islanders themselves proved to be.

Mr. Johnston

I thank the hon. Gentleman for confirming that.

The view that we took was perfectly proper. Successive Governments had failed to give the Falklanders the political and economic support that would create a confident climate, both for the inhabitants and for the development of the islands. It was also proper to argue that the then Government should proceed actively to correct that failure, and that is what we were doing.

Hon. Members on both sides felt that while the number of people who lived on the islands—this matter has been referred to often, both in the House and outside—was relatively small, many of them came from families who had lived there for a long time and who, irrespective of the territorial dispute with Argentina—after all, that country had been unwilling to submit to the international court at The Hague—clearly had established rights to live there in peace, and that Her Majesty's Government, who, as the Shackleton report of 1976 showed, had derived a tax benefit from the Falkland Islands of around £1 million, therefore had both a moral and an established economic responsibility to take some action.

What we said on that occasion was based on the assumption that the situation of the islanders would not be disrupted by force. Incidentally, I must say to the hon. Member for South Ayrshire, for whom I have great respect—I suppose that the same applies to the hon. Member for West Lothian (Mr. Dalyell), who has just come into the Chamber—that I supported the sending of the task force. I thought we had no alternative but to respond to the invasion in the way that we did. I did not want it, but I saw no way round it.

There is no doubt that the fact that the Falkland Islands have been invaded, and might be invaded again, creates a new and an unquestionably difficult situation. We cannot baulk that. That is particularly true for people like myself, who supported the Falklanders both before and during the conflict. Certainly it is a sad reflection on successive Governments that a development programme for the Falklands required a costly and, it could be argued, an unnecessary war to bring it about. However, it is no longer simply a question of how much we are prepared to spend on the development of the islands, as was said by the right hon. Member for Brighton, Pavilion (Mr. Amery), but how much we are prepared to spend over and above that to defend the development against capricious attack.

The attack by Argentina on the Falklands was, in my opinion, an atavistic action. However, the general support that it aroused in Latin America—I say, in particular to the hon. Member for West Lothian, a support that I, as a democratic politician, regard as an anachronistic but nevertheless real reaction, and a fact with which one has to deal—does not rule out the possibility of a repetition of the invasion. The Government need to guard against that, particularly if they are to proceed with their development programme. Such an open-ended commitment will not come cheaply, and therefore cannot be entered into blindly.

I make it quite clear that, in my view, we have an absolute responsibility to the Falkland Islanders. That responsibility compels me to say that a time could come when I would have to say to Her Majesty's Government that the cost is so great, is increasing so much, with no evident end, that one might have to offer the Falklanders a choice of staying, whatever the risks and problems that that might bring, or being generously assisted somewhere else.

Mr. Dalyell

The sooner the better.

Mr. Johnston

The hon. Member for West Lothian says "The sooner the better". It is certainly not a course of action that I advocate, or I should not have supported the sending of the task force in the first place. My position is as consistent as that of the hon. Members for West Lothian and South Ayrshire. It is not a course that I would willingly see undertaken. Nevertheless, we are foolish not to look the question squarely in the face.

It is true that we have time. I accept that it is impossible for the Government at this moment to treat directly with the Argentine Government. Even if their claims were legally sustained, they have shown themselves unfit to adminster, and by the violence that they have imposed they have breached all accepted international rules of conduct.

Mr. Hooley

Is it not somewhat ironic that apparently we cannot treat with the Argentines on general political matters, but when it is a question of the profits of the banking community in this country it is perfectly easy to come to an arrangement?

Mr. Johnston

I agree with the hon. Member. I had not proposed to raise that issue, but I agree that it was most extraordinary. The point has been made by other hon. Members, and there is no need for me to go over it. What we are talking about in this case, however, would inevitably be an arrangement whereby sovereignty was shared or administration was shared, and I do not think that that is on with the present Government in Argentina. They engaged in almost stone-age tactics. In that way, they buried the idea of any form of shared sovereignty until such time as Argentina proves its internal democratic stability and its sense of international responsibility over a period.

However, that does not mean that we must bury the search for a stable, secure background to development. On the contrary, it impels us to do so. It was disappointing in the extreme that the Minister—who perhaps will now be called the Minister who does not want to be interrupted—failed to say anything about that. He said hardly anything about the security background to the Shackleton report and that is fundamental to whether we do or do not.

Let me make three brief points. First, the Government should continue to act with vigour within the United Nations to see whether any agreed arrangements can secure the islanders from interference in their established way of life. It makes no sense to abandon the examination of the trusteeship solutions and the like because they were put forward in good faith by the Government previously and I do not see why they should be abandoned now. It is not in the interests of the islanders or ourselves that we should ignore those realistic propositions, which should be looked at carefully.

Secondly, this is a good opportunity for the Government to take some initiative at the United Nations to see whether at long last some type of United Nations force could be created which might move into such areas of dispute. The Minister screws up his face slightly. I regret that it is a habit of many Conservative Members to decry the impotence of the United Nations. However, that is not an argument for doing nothing to make it more effective. One way to make it more effective would be to establish a force which could move into areas where there were territorial disputes, such as Belize and Guyana, and perhaps at least create some sort of barrier or cordon sanitaire to reduce the possibility of an ultimate invasion.

Thirdly, we would be most foolish not to work with the United States. The Minister did not mention the United States, but we should work closely with it. I hope that when the Minister replies he will be able to say that the Government are in close touch with the United States about the strategic and defence aspects of the Falklands, as well as the political implications, which are clearly of enormous importance to the United States, as we have seen from its actions since the war ended.

I have spent a long time on those matters and I know that many hon. Members wish to speak. Apart from what I said at the beginning, I do not think it would be valuable to analyse the Shackleton report clause by clause. I have raised those questions because we must face up to them and have some reasonable confidence of our capacity to resolve them. Unless we do, the Shackleton report will be more a documentation of our bad conscience than a practical programme for development.

7.2 pm

Mr. Peter Viggers (Gosport)

I feel particularly privileged to follow the hon. Member for Inverness (Mr. Johnston) because I wish to comment on the general gist of his points. Faced with an idea which is immoral, illegal or fattening one can either say "Not yet" or "Perhaps no" or one can say "No" firmly and clearly. For the British Government or this Parliament to say that we might well consider United Nations' trusteeship or other ideas for the sovereignty of the Falkland Islands, either now or fairly soon, is tantamount to saying that we are prepared to compromise on the islands' sovereignty. Having sent the task force to the islands and having fought for them and having won, I am sure that the only posture that we can now take is to defend wholly the islands' sovereignty. On that basis we can perhaps discuss with other countries possibilities for trade and even other arrangements which might develop from trade. However, for us to equivocate at this point would be disastrous and would undo so much of the work that was done by the task force when it went to the South Atlantic. Our posture must remain one of unequivocal sovereignty. On that basis we may he able to develop trade relations and other arrangements with other countries but in no other way can we see the way forward from where we are now.

I am able to contribute to this brief debate as a result of my recent visit to the Falkland Islands. The updated Shackleton report was not based on a more recent visit to the islands and the war has changed the position there in three ways. First, on a temporary basis, through the presence of mines and ammunition which pose a hazard. In addition, there is war damage, which can be repaired. The second change of which the Shackleton report could not take proper cognisance is the presence of the troops. They place a substantial pressure on resources. That will in due course diminish but at the moment it is a major problem.

The third change is that the islanders now feel a new sense of certainty. Where previously they were not sure where successive Governments stood in relation to the islands' sovereignty and future, they now feel that the Government are committed to the islands, and have more confidence now than before.

Mines pose a major problem, as does the clearance of ammunition. As one walks or flies around the islands one sees piles of ammunition everywhere particularly near the Argentine positions, and ammunition is still being found and played with by children. I saw ammunition in the sea opposite the Uplands Goose hotel in Port Stanley, as yet uncleared, perhaps unnoticed. The problem caused by the excessive crowding of troops in civilian accommodation is being greatly diminished by the building of Portakabins and the movement of a coastal unit to Port Stanley. We should pay tribute to the military authorities who recognise the danger of swamping the civilian population. At considerable inconvenience to themselves troops are moving out of civilian accommodation such as the community centres into tented accommodation to provide social centres for the different settlements on the Camp. That is an important feature which is greatly appreciated by the local community. The temporary problems I have described will be overcome.

On longer-term issues it is important to remember that we are dealing with between 1,700 and 1,800 people. While the whole attention of this Chamber is focused on those islands we must remember that the number of people concerned is small, and that we are dealing with small problems. To think in terms of a major international airport and the massive development of tourist facilities is wrong. It is inappropriate because we are dealing with a small number of people. If Britain tries to impose a blueprint for major development we shall be wrong. The best ideas in the Falkland Islands will develop from within. We must always remember that a war does not turn a shepherd into an entrepreneur. The character of the people remains one of quiet living, with little ambition for change.

The islanders see their problems as external and internal communication, and education. My hon. Friend the Minister of State dealt with education in his opening speech and I am glad that resources have been made available for the continuation of secondary education. Primary education is broadly carried on in the Camp areas. If we show ourselves uncertain, vague and unclear in our intentions on external communications, it will be difficult for us to develop the connections that we need with some South American nations. They will wait to see which way we shall jump and which way Argentina will jump. If we show complete resolution and determination it will improve the chances of arranging air communications through other South American countries. With regard to internal communications, it is important that we should help the infrastructure of the islands to develop so that the people can then develop within that improved infrastructure in their own way.

The hon. Members for South Ayrshire (Mr. Foulkes) and for Hackney, Central (Mr. Davis), who opened the debate for the Opposition, made substantial points about land ownership. I read the updated Shackleton report before I went to the Falkland Islands. I was convinced that it would be difficult to see any advance without a major change in land ownership. That was my conclusion from the report. Having been to the islands and spoken to individuals and to farm managers, I now believe that, although a change in land tenure on a longer-term basis might indeed give advantages, nevertheless, to impose a change or to have rapid change at this time, would be a mistake. The managers—the people who work on the farms and the estates—do not necessarily have the entrepreneurial skills to own the farms as well as run them, nor do they have the financial resources to withstand a year or two of bad agricultural produce or one or two years of bad wool markets. It may appear from Britain to be a good idea to break up some of the estates and to arrange for the individuals who are currently managing the estates to own them, but I believe that, rather than a stabilising feature, it might be an unstabilising feature, if it is done too soon.

Mr. Foulkes

Does the hon. Gentleman agree that part of the proposal for the Falkland Islands development agency was that it should have funds to be able to assist the farmers in setting up farms on their own? Does that not answer his latter point?

Mr. Viggers

I do not claim a specialist knowledge of farming in the Falkland Islands. I know that my hon. Friend the Member for Dumfries (Sir H. Monro) has made a special study of the subject. I very much hope that he will be able to catch Mr. Speaker's eye because I am anxious to hear his contribution. But I do believe, on the basis of my own conversations, that the proposal in the Shackleton report would be too extreme and would lead to a lack of stability. I should like to see a more gradual move. I should like to see individuals being given the opportunity to develop their own entrepreneurial skills and to acquire land in due course, but to impose an overall blueprint for the break-up of large estates and for their transfer to individuals would be a mistake and would be an unstabilising feature.

I strongly support the concept of uprating the grasslands trials unit. It is a remarkable experience to visit the islands and to see that there are no trees. There is indeed a need to improve the soil and the agricultural skills. I recognise, having seen the islands again, that to build the Port Stanley-Darwin road might be helpful, but to think in terms of developing a road structure outside that area is unrealistic. The number of people is so small that there is no need for the roads. The maintenance costs would be great.

I hope that fishing, salmon ranching, and tourism can be developed. I hope that one day krill can be developed and the search for oil can be carried out. It is too early to decide these matters. We are more likely to have a breakthrough in those areas if we show resolution over the sovereignty of the islands than if we show equivocation.

My summary would be—let the development grow from within the islands—do not impose a blueprint from Britain.

With regard to the longer-term military presence and its implications, there may well be scope for the use of part of the West Falklands as a military training area. I should like to see a development not only of the British military training use of part of the West Falklands but for it to be given, should it be possible, a NATO dimension. That would be helpful to the longer-term economy of the islands.

The principles of the longer-term military presence are being laid down now by the military and civil commissioners. There is to be a healthy degree of separation between the troops and the civilians. I am concerned about the rest and recreation facilities for personnel in the Falkland Islands. Until now they have worked seven days a week, and flat out, in a remarkable way. No praise is too great for all the Service personnel we met in the islands. But of course no one can work seven days a week indefinitely.

The military commissioner has now reduced the working week to six and a half days. There are some facilities for rest and recreation [Interruption] The hon. member for Liverpool, West Derby (Mr. Ogden) is laughing. The reduction to six and a half days a week imposes its own problems because of the lack of any form of rest and recreation during the spare time given to the men. There are 80 video sets on the islands. There is some fishing when the weather is suitable. There is always adventure training. The islands are an officers' paradise for planning adventure training. There is some sailing, and social centres are being built in the Portakabins centres and there will be social centres in the coastels. Nevertheless, a problem remains and we must face, as a Government, the issue of whether it is possible to maintain the tour of duty in the Falkland Islands at six months for all the troops or whether more of the troops should serve a shorter period of four months. In the case of the Royal Air Force personnel manning the Rapier systems the figure is two months. It may be necessary for economic reasons to maintain a tour of six months but we should consider the matter.

The troops provide the islanders with 10,000 tourists a year. More should be done to encourage the islanders to grasp the opportunities rather than for the Government to create and plan the development of the islands.

Mr. Spearing

What does that mean?

Mr. Viggers

The presence of 4,000 to 5,000 troops in the islands and their six-month period of service means that 10,000 people a year wearing uniform will be going to the Falklands. They are tourists. They are capable of spending money in the way that any tourist can spend money. They need certain facilities and I shall give some examples. Mutton produced on the islands is currently not thought to be suitable for military use. Research is being carried out to ensure that the islanders can provide the food that the Service men need. Agricultural produce can also be provided for these working tourists. There is no bakery on the island other than the one operated by the Army. Surely the indigenous population could provide bakery facilities. There are no dry cleaning facilities on the islands. The hon. Member for West Lothian (Mr. Dalyell) knows very well that such facilities were provided from Argentina before the war. Most people who comment on this general area mention that anyone operating a mobile fish and chip shop would make a fortune, but no one has yet got round to operating one. There is a dearth of souvenirs on the islands, There are no civilian sporting facilities. There is no bowling alley and no one is thinking of putting one there. There are no shops for books, sporting gear, films and so on. If I appear to be putting the case in microcosm, I am, because it is a small problem. A small number of jobs and a small amount of money would have a massive gearing effect on the islands. I hope the islanders themselves will grasp the opportunities.

One of the happiest sights on the Falkland Islands is the aircrew of the incoming aircraft arriving with their fishing rods. They have been there before, they know what the islands can offer and they are taking advantage of the facilities. Let us hope that more of our troops will have the opportunity to do the same.

We must improve the infrastructure. Transport is the key to the islands. The Falkland Islands Government Air Service cannot currently operate because the aircraft were destroyed during the war. Two aircraft are on their way. A helicopter—a Bell Huey—is, I hope, shortly to be licensed. My hon. Friend the Minister of State knows the problem and I hope that it has been possible to overcome it so that the Falkland Islands Government Air Service can operate the helicopter and the two aircraft.

I gather that before the war FIGAS operated on the basis of a taxi service. That meant that someone from one of the Camp settlements who wanted aircraft transportation would telephone, or use citizens band radio, to ask for the air service to call at that particular settlement the following day. It should be possible to set up a scheduled air service. After all, there are only seven large settlements—a large settlement in the Falkland Islands means a settlement of more than 35 people.

There are only 13 medium-sized settlements—that means settlements of 16 to 35 persons. Should it be possible to have a scheduled service, the psychological approach to it would be different from that to the taxi service, when an individual has to call up the service whenever he or she wishes to use it. A scheduled service would be helpful.

I have been disappointed by the content of the mail that I have been receiving recently on the South Atlantic fund. Some press comment has been critical of the fund. Criticism has been expressed of the delay in distributing the fund and of the decision of the managers of the fund about providing free telephone calls for the troops in the South Atlantic. This is a mean and grudging approach to a spontaneous outpouring of generosity. Can we not be more constructive in our response to the fund? It is new money that would not have been available but for the generosity of the benefactors. It is extra money to be used for the next-of-kin and for those wounded or deprived in the South Atlantic. The benefactors gave the money in the hope that it would be helpful and used constructively. We should move away from some of the carping criticism of the fund that has recently been seen in the press. I have been greatly impressed by the care and concern of those handling the fund and I hope that there will be less criticism in future.

In many instances the Falkland Islanders have suffered considerably. I visited the parents of one of my constituents. I believe that they are the oldest married couple on the islands. Their dearest wish is that their daughter, who is one of my constituents, should be able to visit them on the Falkland Islands. There seems to be no facility for the Government to assist those who want to secure such passages. The cost is prohibitive otherwise, and in the instance to which I have referred it is not possible for the islanders, because of their age, to travel to the United Kingdom. It is the wish of some people in the United Kingdom to travel to see their relatives on the Falkland Islands. The Minister knows the names concerned and I shall not mention them now. If it is possible to assist those who have close family reasons for wishing to visit the Falkland Islands, I hope that something can be done. I know that such assistance will be greatly appreciated.

7.23 pm

Mr. David Young (Bolton, East)

I believe that had the first Shackleton report been implemented the events of April need not have taken place. However, they took place and our reason for sending the task force was to give sovereignty to 1,800 people on the islands. It seems that we are in danger of considering every aspect of the problem except our wish to support the 1,800. The population of the entire island is 1,800. I represent 60,000 constituents and one of the wards within it contains 12,000. That puts the situation into perspective.

What do the islanders require? First, they require a halting of the decline of the population. Secondly, they require the right population mix. Thirdly, we must give the islanders some stake in their own islands. We tend to forget the need to give them a stake in their islands when we talk so glibly about not redistributing the farms. Many of the large farms are owned by absentee landlords. If we continue to maintain a feudal society for the Falklanders, we shall not encourage new generations of Falklanders to remain on the islands. If they do not remain on them, we are likely to end up with an island full of soldiers and experts but with none of the islanders whom we went to defend. That would produce a ludicrous imbalance.

When the parliamentary delegation visited the islands there were no tensions between the civil populations and the forces, but everyone recognised that they would develop in time. This is why there has to be a separation of troops from the civil population. If we continue to pack in troops or experts on the islands, we shall have sooner or later a clash between the islanders and the visitors.

Until I visited the islands I was not aware of the high dependence of the islanders on Argentina. They bake their own bread but additional bread was imported. The islanders went to Argentina to do their shopping. Their dry cleaning was sent to Argentina. I should be sad to see the dependence of the islanders on Argentina replaced by dependence on the Army. There is a real need to ensure the economic survival of the islanders. There is a need for them to acquire expertise and to participate. If that does not happen, we shall not have the basis on which to develp the islands into a viable economic proposition. It is to that objective that we should be bending our minds.

I was concerned when I heard the Under-Secretary of State talk about the education system. The solution that he propounded was that of visiting teachers, but that is not sufficient for "settlement" education. Many hon. Members may not be aware that in many of the settlements primary education is provided by a storekeeper doubling as a teacher. There is a great difference between the standard of education in the settlements and the standard in Port Stanley. If we want to give the 1,800 the necessary expertise to ensure that the islands become a viable proposition, we must recognise that the people themselves are the basis on which we must build. A primary requirement is a good education system.

Not much will be achieved by providing a good education system if those who take higher education, and in so doing leave the islands, are not encouraged to return to their homeland thereafter. I ask for an assurance from the Minister that islanders who leave the islands to train as doctors, teachers, chemists, agriculturists or anything else will on their return receive as good a salary, if not a better one, than an expatriate. Only by that means will we encourage native expertise. I should sooner see money spent on securing that then on abortive schemes to provide airports.

The main source of employment is agriculture, and we must give the population a stake in the country that we went to defend. When I listened to the Minister, I was concerned because it was not clear whether he wanted to give the population a stake in agriculture or whether he was defending the absentee landlords. If the islanders are given a stake in their community, the feudal society that has been outlined in statements from the Government Front Bench will come to an end.

Much has been said about the airport. Those of us who had the privilege of seeing the difficulties on site were left extremely worried about the proposal. To us, unlike the Minister, air communications seemed to be a key factor. The only problem is that the original airstrip was 4,000 ft long. It has now been extended to 6,000 ft. But to take a wide-bodied jet, apart from the weight-bearing difficulties, it must be extended to 8,000 ft and the engineers on site told me that it cannot go beyond 6,000 ft.

Sir Hector Monro (Dumfries)

That is wrong.

Mr. Young

We shall get an answer from the Minister, shall we not?

Mr. Ogden

Not necessarily.

Mr. Young

If the airstrip is strengthened, the defence capability in that period will be reduced. The military on the island were not prepared to countenance that. That means that an additional airport must be built. Where will it be built? How much will it cost? I should like to be given an estimate of the cost. I have heard that it may cost anything from £30 million to £300 million. If we build a new airport, will it be for civil use or for use by the military as well? Whatever may be the advantages of having an airstrip at Stanley, it is the worst location with regard to weather conditions for aircraft.

We must ask questions such as those if we are not to face with a series of long-lasting commitments. Perhaps the Minister will confirm whether the existing airport can yet take a Nimrod aircraft. If it cannot, there is little chance of its taking a wide-bodied jet.

I left the islands with two impressions. The first was that any development required air communication of some kind. The second was that communication had to be with the mainland in some form or another. Is it not time that we considered some form of international trusteeship? At the moment, if we proceed independently, there will be great difficulty in making those arrangements. Any suggestion that we advance for the development of the islands must essentially depend on markets abroad and communications. If we do not bear those two factors in mind, we are not facing the realities.

We must recognise that if we do not take that type of decision now, we may find that we have landed ourselves with a commitment that will not, in the long term, aid the islanders. Moreover, it will put the British taxpayer in an open-ended commitment that rivals or surpasses Ulster.

I noted when I talked to the islanders and the council that they realise that if we do not recognise that the financial commitment to the islands must be kept in check there will eventually be a backlash from the British taxpayer. They were eager to avoid that. Therefore, I beg that, when we examine these schemes, we bear in mind and the islanders recognise that, in the end, the United Kingdom has commitments not only to the Falkland Islanders but to people here, Gibraltar and elsewhere. On balance, we must bear in mind the totality of the bill and recognise the hard decisions that we must take now.

7.34 pm

Sir Bernard Braine (Essex, South-East)

This has been a most interesting and thoughtful debate. I broadly agree with a great deal of what has been said by hon. Members on both sides of the House.

I especially agreed with my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) when he said that if we had implemented Lord Shackleton's first report—an admirable and practical document—British interest and confidence in the Falkland Islands would have been clearly demonstrated at a crucial time and a clear signal would have been sent to Buenos Aires that Britain stood by the islanders and would guarantee their future.

It is not fanciful to argue the reverse. The failure to implement Lord Shackleton's first report sent a clear signal to Buenos Aires, perhaps unwittingly I concede, that we did not intend to stand by the Falkland Islanders.

Perhaps it would be well to suspend judgment about the causes of the Falklands war until we have the Franks report. I have little doubt, however, that although our Armed Forces' achievement was superb—tributes have rightly been paid to them, especially yesterday—that conflict would never have arisen if successive British Governments had had a clearer perception of the problem and had taken a firmer stand. In short, it is a mistake to believe that the Argentine invasion of 2 April was prompted solely by events that took place immediately before. The roots of the trouble go back, as many hon. Members who have been in the House for a long time know, to the mid-1960s, to British irresolution, to duplicity as far as the hapless Falkland Islanders were concerned, and to a persistent failure to understand how Argentine Fascist generals, indeed the Argentine nation as a whole, perceived our actions over a long period.

On that, and especially in the light of the ill-informed and intemperate attack on me by the hon. Member for South Ayrshire (Mr. Foulkes) I wish to make four points. First, having regard to the Falkland Islanders' undoubted right to self-determination—in the United Nations Charter—there never was a case for entering into negotiations on sovereignty. The United Nations resolution was not mandatory; it was an invitation to two parties in a dispute to come together. If we were to have regard to the wishes of the Falkland islanders on the subject, there never was a case for entering into negotiations solely on the subject of sovereignty. On other matters I have never opposed trying to get agreement with Argentina in respect of better communications, trade and common interests such as the joint exploitation of resources. The suggestion that I have resolutely opposed any kind of negotiation is a lie. It is simply not true. However, I have consistently opposed discussion of sovereignty and I shall explain why.

I have here the minutes of a meeting of the Falkland Islands Legislative Council held on 20 May 1968 when we had a Labour Government here. Lord Stewart of Fulham was then Foreign Secretary. The motion before the council was carried unanimously. It read: Concerning the future of the sovereignty of these Islands this Council welcomes that portion of the statement made by Her Majesty's Principal Secretary of State for Foreign Affairs in the House of Commons on 1 April 1968, when he said that the wishes of the islanders are an absolute condition. And this Council, with the full support of the Falkland Islands electorate, recently demonstrated in the Colony's general election, re-states the desire of the Falkland Islanders to remain British, under the British Crown and ever closely linked to the homeland of the United Kingdom". The attitude of the Falkland Islanders and their elected representatives has never changed from that day to this. British Governments should have understood and respected that attitude. They should have honoured the pledges clearly made. They should not have sent signals that could be, and were, continually misread in Buenos Aires. Not all the fault lies with the Argentines. The confusion started here in Whitehall.

Mr. Hooley

Will the hon. Gentleman decide who is conducting the foreign policy of the United Kingdom? Is it this Government and this Parliament or the Falkland Islanders?

Sir Bernard Braine

The hon. Gentleman, for whom I have great respect, evidently did not hear the words of the resolution that I read out. They referred to a decision taken by the Government of this country and to a policy statement made in this House by the then Foreign Secretary. It is not for me to explain why pledges made to this House and believed by the Falkland Islanders were not carried out.

Secondly, if the economy and the population of the Falkland Islands started to run down in the early 1970s, as Lord Shackleton made plain in his first report and to which reference has been made in the debate, it was no fault of the islanders. The fall in wool prices was a contributory factor, but a great deal was owed to British Government policy that progressively undermined confidence in the future of the islands. Some of us foresaw that with the winding-up of the Commonwealth Relations Office and the Colonial Office, and their merger with the Foreign Office, the transfer of the Falkland Islands from people who understood their problems to the Latin American desk of the Foreign Office meant that a weakening of their position would follow.

I choose my words carefully. It was shameful that a small but democratic British community that was a net contributor to the British balance of payments 15 to 20 years ago, completely debt-free and enjoying a standard of living higher than most people in Latin America, should become a pawn in the Whitehall game of trying to placate a South American State whose Governments were patently unfit to govern their own people.

Thirdly, when the first Shackleton report was published in 1976—I join in the tributes paid to Lord Shackleton for an admirably written report—it showed clearly for the first time what might be done to restore the islands' economy. The report was, of course, limited to economic prospects. It did not venture into any political considerations. It was none the worse for being radical in its approach. It was realistic. It argued for economic co-operation with Argentina if this was possible but if it should prove impossible it set out what should be done to give the Falkland Islanders a viable economic future.

The most crucial of the recommendations was the extension of the Port Stanley airfield. That was the heart of the matter. But the proposal was never implemented.

My fourth point is this. It is incredible that in this House, dedicated to free speech and founded in the struggle for liberty, there has been little reference to it. Only the hon. Member for Hackney, Central (Mr. Davis) has mentioned it but then the hon. Gentleman and I share strong feelings on the issue. From 1976, Argentina passed into the hands of a cruel and corrupt military dictatorship. It should have been clear to the policy makers in Whitehall as it was to many Back Benchers on both sides, including the hon. Member for Hackney, Central and myself, that it was morally wrong and politically inept to discuss a possible transfer of sovereignty over British subjects to such a regime. What was not revealed by the then Government or by their successors was that among the many thousands of Argentines and nationals of 29 other countries who found themselves in the junta's prisons and torture chambers, and who are now presumed to be dead, were British subjects and Anglo-Argentines, the sort of people the Falkland Islanders would have become if we had succeeded in transferring sovereignty.

To enter into such negotiations was a disgrace. It was one more signal among the many sent to Buenos Aires that Whitehall did not really care about the Falkland Islanders. I have given detailed evidence on this to the Franks committee. I shall not pursue the issue further at this stage. If we are now to exclude, at least for some time ahead, the option of transfer of sovereignty, at least until Argentina becomes—as we must all pray—a stable democracy that respects fundamental human rights, we must do two things. We must guard against a further piratical venture, and we must restore, so far as we can, the Falklands' economy.

Lord Shackleton's second report is as realistic and practical as his first. I repeat that we are very much in the debt of this distinguished man and his team. I was pleased to hear my right hon. Friend the Foreign and Commonwealth Secretary agree on 8 December with the report's broad conclusions, especially the idea of establishing a development agency. That seems to me very sensible. I shall not quibble about reservations made by my right hon. Friend over certain detailed proposals, although having spent half a lifetime tracking development in Third world countries and having been Chairman of two Select Committees on Overseas Aid and Development, I am not happy about the manner in which Lord Shackleton's proposals for smaller farm units have been brushed aside.

For the moment, however, I accept the reservations. After all, what matters at the end of the day is what the Falkland Islanders themselves really think about these proposals. The Government have promised that their views will be taken into account. If confidence is to be created permanently, and if the population is to be increased, I should have thought that the need was to increase the number of people with a stake in the land. I suspend judgment, however, until I hear how the islanders themselves react.

The real test will be the extent to which, and the speed with which, schemes are implemented for resource development, for giving real incentive to the islanders and encouraging young people to go out to join them and start a new life. There has to be an improved all-weather airfield. I shall not even argue whether it should be located in a new place. I am prepared to wait and see what emerges from the present study. I hope, however, that an announcement will be made soon.

The Minister of State has rightly stated today that the importance of sea communications should not be forgotten. Of course. What is now blindingly obvious, however, was not always recognised before the Falklands invasion. I was delighted to see that Lord Shackleton saw merit in linking the islands with the excellent St. Helena and Ascension shipping service. I can perhaps reveal to the House for the first time that this was a major recommendation in a report that I made on St. Helena and Ascension following a visit I made there at the invitation of the governor and the Legislative Council in 1980.

In that report, which dealt with the neglect of St. Helena and its enforced dependence because of that neglect, I remarked that, to the Foreign and Commonwealth Office, Ascension, St. Helena and the Falklands, all dependencies in the South Atlantic, might just as well have been in three different oceans. Yet without Ascension we could not have mounted the Falklands rescue operation, and without St. Helenian labour we could not maintain Ascension.

St. Helena has a surplus of skilled and reliable labour, and we have been told this afternoon that the Falklands are short of tradesmen and skilled people. What happened then in 1980 when advertisements were published in St. Helena asking St. Helenians to go to the Falkland Islands and several hundred responded? Did that project founder on the question of return passages? Here we have a surplus of labour in one part of the region and a shortage in another, yet nobody in the Foreign and Commonwealth Office had the wit or imagination to see that the problem might be dealt with on a regional basis. What happened to the idea of finding an outlet in the Falklands for the loyal people of St. Helena?

Then again a joint shipping service is crucial to the survival of all three territories. Until the day dawns when it is possible to hold out the hand of friendship to a democratic Argentina, we have a duty to ensure not only air but adequate sea communications for all our dependencies in the South Atlantic.

I believe that there will be a great reckoning in Argentina. If the hon. Member for West Lothian (Mr. Dalyell) were here, I would address these remarks directly to him. Argentina's long-suffering people may well get rid of their corrupt and rotten Fascist military dictatorship quite soon and bring to justice those who have murdered and tortured thousands of their own people. Once a democratic regime has been established, capable of guaranteeing basic human rights, we may feel confident enough to discuss improvements in communications, joint development of resources and collaboration in Antarctica.

My right hon. Friend the Member for Pavilion made an admirable speech. I think that the whole House agreed with his view that the horizon should be widened and the problem of the Falklands seen in terms of the development of the resources of the South Atlantic and Antarctica as a whole. Those were wise words. The world is too small to perpetuate quarrels between peoples.

In the meantime, however, we must be realistic. We have a solemn duty both to make reparation for our past neglect of the loyal and democratic people of the Falklands and to give them hope of a viable economic future. In this way we shall restore our honour in the international community and our standing as a defender of freedom.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

I understand that the Opposition Front Bench spokesman wishes to speak at 9.10 pm. Eight hon. Members are waiting to speak in this important debate. If they can tailor their speeches to rather less than 10 minutes each, I shall be able to call them all.

7.53 pm

Mr. Frank Hooley (Sheffield, Heeley)

I shall endeavour to follow your advice, Mr. Deputy Speaker. Having listened to extensive speeches from my colleagues, however, I shall try to make all the points that I wish to make.

The hon. Member for Essex, South-East (Sir B. Braine) was right to say that the first Shackleton report was not concerned with sovereignty. Indeed, Lord Shackleton stated in the preface: the terms of reference exclude any matters relating to the political future of the Falkland Islands and their dependencies". In other words, the survey was conducted on the assumption that the political status of the islands would remain the same as in the previous century and a half. Lord Shackleton continues, however: The sovereignty issue overhangs our report as it does the Falklands and the absence of a settlement could well inhibit the full development of the islands". It is no use trying to run away from the sovereignty problem as it has been a dominant factor in all the discussions and is as relevant to the Shackleton report as to the political problem.

The full cost of the Falklands disaster is now becoming apparent—2,000 dead, thousands crippled and disabled, and the ugly prospect of an expensive and unnecessary military garrison 8,000 miles away in the South Atlantic. Indeed, some have estimated that the total bill will reach £3 billion in the next few years.

The only semi-bright light in all this is that the Falklands disaster may cause people and Governments of this country to rethink their colonial policy in relation to territories such as the Falklands, Gibraltar, Hong Kong, and the Turks and Caicos Islands. That rethink must come and the Falklands tragedy may force it more urgently upon Governments than has been the case so far.

Lord Shackleton's verdict on British stewardship of the Falkland Islands can be summed up in four words—private exploitation and public neglect. With regard to private exploitation, today's debate has focused on the problem of abstentee landlords and the outflow of funds from the islands due to absentee ownership of the land. Reading the report and listening to the debate, one might almost think that we were talking about nineteenth century Ireland rather than twentieth century Falkland Islands. The Shackleton report is devastating on this point. The 1982 report states on pages 6 and 7 that before 1976 the outflow greatly exceeded the inflow and since 1976 dividends out have been £1.1 million but investment in has been only £600,000. Not only has there been a net outflow of private capital, but Investment has not been sufficient on many farms even to maintain existing assets". In other words, the private entrepreneurs had such a rotten economic policy that they were not prepared to put in sufficient money even to maintain the value of the farms and other property that they owned. Worse than that, since 1976 the deficit on the Falklands account—the lack of funding—has had to be made up by the British taxpayer who has put in the money through the aid programme. The taxpayer has had to make up for the results of squalid private enterprise exploitation.

There has also been public neglect of the islands over a long period. For example, Shackleton says that we now should spend £10 million to £15 million to provide a decent road network. Moreover, for an island community dependent on shipping, the report states on page 15: The state of repair of the Falkland Islands jetties is generally poor". A major recommendation of the report is: A new main all-purpose jetty will be required in Port Stanley … costing £3–£3.5 million". On air communication, a central feature of the Shackleton recommedations is the need for a major 8,500 ft runway and the establishment of regular civil air communication capable of taking modern medium-haul airliners and costing £30 million. International air traffic has existed for 50 or 60 years, yet in 1982 a report on a British dependency finds that there is still a need for a reasonable civil airport capable of taking not world transit liners but medium-haul jets to provide reasonable civil air communication.

The report is damning about the capacity of the Falkland Islands Government to carry out any development at all and proposes the appointment of no less than £3½ million worth of new officials and staff to provide that Government with the capacity to handle the development programme suggested in the report. This is not new—this was said in 1976, and nothing effective was done about it.

The energy crisis hit the world in 1973, 10 years ago, and yet we have had to wait for the Shackleton report in 1982 to suggest that perhaps there should be wind generators producing electricity, or perhaps a thermal power station burning the local peat, instead of the importation of highly expensive oil, to keep the islands' economy going. It does not seem to have occurred to the Falkland Islands Government, or whatever section of the Foreign Office that is responsible for these matters, that alternative energy sources might have been useful or important when the oil crisis hit the world economy.

One of the most astonishing sentences in Shackleton's report—it certainly startled me—is about schools. Here we have an island whose economy is based on agricultural activity—farming, looking after sheep, grassland and so forth. However, in 1982, Shackleton recommends the introduction of rural science in the school syllabus This suggests that, in a schooling system in a farming community it has apparently never occurred to anybody that the study of rural activities should be somewhere in the syllabus.

That is the record of public neglect of these islands by successive British Administrations. We have to ask ourselves why this exploitation by the private sector—and it has been a squalid and ruthless exploitation of which the chairman and directors of companies such as Coalite should be ashamed and publicly pilloried—was allowed. It is disgraceful.

Why was this exploitation allowed to continue, and why have we neglected these islands when we have been governing them for 150 years? Even if one discounts the pre-Second World War period, we have had 40-odd years in which to make up for that neglect. The answer is fairly clear from the Shackleton reports. The clear implication is that there can be no sensible, viable, economic development plan except in terms of a healthy relationship with the mainland of South America, and that means a reasonable arrangement—politically, economically, and so forth—with Argentina. A political settlement is imperative if there is to be any sensible economic development in the Falkland Islands.

This fact was recognised by Shackleton, and I am glad that the hon. Member for Essex, South-East drew my attention to it, because I particularly looked up the introduction to the 1976 report. Shackleton makes the point that the sovereignty issue overhangs the whole economy of the Falklands and that without a settlement there there is no way forward.

This is borne out by Shackleton's specific recommendations. On air communication, he says clearly that any successful arrangement would have to be either through Punta Arenas or with Montevideo. Even if the communications are through Montevideo, that is subject to Argentine agreement because it involves flying through Argentine air space.

With regard to fishing, Lord Shackleton makes an interesting statement on page 19 when he says: The recommendations relating to off-shore Patagonian Shelf and Southern Ocean fishing should be viewed in a wider and longer-term context than that simply of the development of the Falkland Islands. We cannot talk in terms of development of fisheries and so forth in that area without taking into account the general political context and economic situation.

I was therefore startled when I read that Shackleton recommends the creation of a 200-mile economic zone around the Falklands and around South Georgia. It would be an outrage to international opinion if this country solemnly set out to lay a claim to 260,000 square miles of the South Atlantic as an economic zone for the United Kingdom 8,000 miles away, particularly at a time when we have conceded half our fishing rights to Brussels in the area around our coasts. It would be an astonishing claim, if we claimed 260,000 square miles of the ocean and its economic resources.

We have already dealt extensively with absentee landlordism, but it is clear that private investment on any sensible basis—that is to say private investment, not private exploitation—will not occur in the absence of a political settlement. The same is true of hydrocarbons. What has been said about the problem of icebergs and other things is right, but the biggest iceberg is the lack of any political settlement with Argentina.

The Shackleton bill for the economic recovery of the Falkland Islands amounts to £35 million for general infrastructure, £35 million for the airport, £20 million for the exploratory fishing, and £18 million for land reforms over a period of five years. The Government's response is £31 million over six years for general development, no land reform, a somewhat ambiguous attitude to the airport—no statement about how much money they are prepared to put in—and a rejection of the 200-mile zone idea, a rejection with which I agree as the proposal is out of court.

Shackleton is rightly apprehensive about the impact of the relatively massive garrison on a population of 1,800 people. The Government are unduly dismissive of those problems, but the garrison will seriously inhibit, as Shackleton claims, any proper economic development.

The rationale for the occupation and retention of this nineteenth century colony was, until the First World War and probably even until the Second World War, its use as a naval base and as a coaling station for the British Navy at a time when the Navy was the dominant naval force in the world. Today, our possession of this territory is a colonial anachronism. The clear message of Shackleton is that the economic future cannot be built on this kind of anachronism and can come about only in the context of a political settlement with Argentina.

I am aware of the difficulties, in the present mood, of arriving at such a settlement, but we should explore some sort of interim arrangement, perhaps for five years, a decade or even longer, with the international community. We should make use of the undoubted and considerable diplomatic abilities of the Secretary General of the United Nations, Mr. Perez de Cuella, who has been entrusted by the General Assembly with a mediatory role between Argentina and the United Kingdom.

There was a reference earlier to the men who had died in the fighting in the Falklands war. My belief is that the only enduring worthy monument to the men who died is not for us to cling to a nineteenth century colony but to ensure, by a political settlement with Argentina, that no man has to die in the future.

8.8 pm

Mr. John Browne (Winchester)

I offer my tribute to Lord Shackleton for his 1982 report, and for his previous report. I agree with many hon. Members that if only we had implemented the bulk of his recommendations in the past, we should not have had to repossess the islands and suffer the humiliation, the loss of casualties and now the huge costs. The background leading to how and why we were tricked and humiliated in the first place by the Argentine invasion is the subject of the Franks report and is not a subject for this debate.

However, we all know that the hostilities have not yet officially ended. Defence is vital to the security and therefore to the long-term economic viability of the Falkland Islands. In looking to the future, we must face some of the clear lessons of the immediate past. Some of these lessons include such things as, first, that the threat that we all face in defence terms is global. Second, defence, it appears—yes just appears as opposed to is—weak, it will be tested—by someone. Third, the United Nations, while it can play an important role in preventing conflict, has illustrated in several instances in the recent past that it has little teeth in taking much effective action once war has started. Therefore, in the final analysis, we must look to ourselves for our defence. The fourth lesson is that diplomatic support is a vital factor. We should remember our friends in the United Nations, in the EC and in the British Commonwealth, who stood by us in our cause of defending freedom against unprovoked, armed aggression. But we should also note those who failed to stand by that principle, and especially those who deserted us in midstream.

Our Armed Forces, as many hon. Members have said, have performed outstandingly. They have shown to the House and the country their value and we must continue to support them strongly. They showed efficiency, flexibility and determination. I shall quote from R. S. Grant, a young subaltern in the Royal Marines, who was at Malvern, the same school as me and you, Mr. Deputy Speaker. He said: The difference came in the calibre of men. Our forces lived rougher, moved faster, carried more and made do with less but still managed a smile and a joke. Yesterday's debate brought out this most important factor of the man on the spot, despite all the weapon systems of modern armed forces.

Our Armed Forces and civilian volunteers have received much well-deserved praise in the past, but no great enterprise is achieved without great leadership. It is clear to me that without the honest, clear and decisive leadership of the Prime Minister we would not have freed the people of the Falkland Islands. The whole thing would have failed dismally. We would still have been merely talking. Armed aggression would have been seen to pay and would have had a dramatic effect upon the total defence status of the free democracies of the world. I for one am glad that in looking to the future of the islands we still have this outstanding leadership and proven ability.

I welcome the commitment of my hon. Friend the Minister to the Falkland Islands Development Agency. It is absolutely correct. I also welcome his drive to gain support at the European Investment Bank for the fishing industry in the Falkland Islands. That is the correct use of that institution.

I also welcome my hon. Friend's tribute to the role of the Armed Forces in the rehabilitation of the islands. It is a dreadful task. The forces there include one regiment from my constituency, the Royal Hampshire regiment, and elements of the 1 Infantry brigade, which is located in my constituency and in which I still have the privilege to serve as a territorial. We must pay a great deal of attention, as my hon. Friend the Member for Surbiton (Sir N. Fisher) said, to the short-term amenities of the garrison, particularly looking ahead to the next winter. My hon. Friend made an important contribution to the debate. I was going to mention the matter in more detail, but now that would be merely repetition.

With regard to mine clearance, what action are the Government taking over the outrageous actions perpetrated by the Argentines in laying plastic mines indiscriminately and in unmarked areas? Are we following the matter in Geneva, the United Nations and so on?

This Government have now done and propose to do more than any other Government to help to build a future for the Falkland Islands. However, I ask the Government to put more pressure on the International Monetary Fund. It is making vast loans to the Argentine Government. Some of the funds are being used to purchase armaments. I agree with Opposition Members and my hon. Friends who expressed consternation at that.

I realise that it is difficult to enforce the use of loan clauses by one sovereign nation on another sovereign nation, especially in this situation. However, through the IMF we can exert considerable influence on the Argentine Government on the use of proceeds of its new loans. Spending those moneys on armaments is not only reducing Argentina's creditworthiness in the international lending market but is diverting vast sums from its citizens and creating more poverty at home. We can and should do more to exert a correcting influence through the IMF.

With regard to land reform, many Opposition Members have urged more positive action in breaking down large farms and creating smaller farms. Lord Shackleton referred to that in his report. I am still uncertain whether that would have any long-term beneficial effects on the islands. I have yet to see the evidence that that would create more employment. By that I mean more viable employment in the islands. This is my only major disagreement with the Shackleton report. I see his argument, but I do not see the evidence that if we implement his suggestion it will create a better economy.

We could have a major impact on preventing the repatriation of earnings by doing two things—first, by restoring confidence in the islands and, second by means of taxation. Also, with regard to land reform, we must make sure that the Falkland Islands Company does not withdraw without a proven viable alternative.

In looking to the future, we must ensure that we restore confidence, for confidence is the key to the future economic viability of the islands. Confidence is the oil that will allow the economy to move forward. If we truly want future economic viability, we must restore confidence. If we want confidence we must show no willingness to discuss the handover of sovereignty to Argentina. It is utterly wrong to talk about negotiating sovereignty at this stage, particularly as the hostilities have not officially been closed.

With the future in mind, I shall submit two ideas for consideration. The first is the establishment of a forward NATO facility, and the second is the establishment of a tax haven.

I have put forward the idea of a NATO facility before. It has fallen on stony soil. Many people argue that the islands are far outside the NATO area. Of course they are. There are other areas of vital interest to NATO which lie outside the NATO area such as the Arabian Gulf. However, unlike the Arabian Gulf, NATO would be welcome in the Falkland Islands. If we allowed NATO to use naval facilities and air and army training areas in the Falklands, large earnings would inevitably be generated for the local community.

Mr. Dalyell

What other NATO country would be daft enough to get involved in an antagonistic position with South America?

Mr. Browne

I agree with the hon. Gentleman that it would be difficult to persuade our NATO allies to join us there and hinder their immediate relationships with South America. However, I believe that we must persuade them that the South Atlantic is the true southern flank of NATO. It was politic but strategically ridiculous to draw a mere map line along one of the tropics and say that it was NATO's southern flank. I hope that the hon. Gentleman will agree that if we create a major airfield in that area it will become an airfield of major strategic importance. It will inevitably influence NATO in its global thinking and our allies and friends in the southern cone of South America.

Finally, will the Minister consider whether it would be feasible to establish a tax haven or an offshore international centre similar to the Channel Islands, the Cayman Islands or even the New Hebrides? Many offshore tax havens are in remote areas and they derive significant income from the international services that they provide. Obviously, to allow the evolution of an offshore tax haven would require a vast investment in improved communications—radio, telex, telephone and of course air. They would affect not just the tax haven but also the islands' general viability.

It is our clear duty to defend the islands. The key to that is the restoration of a confidence which will ensure the viable economic future of the islands. We have now part 2 of Lord Shackleton's report. Past Governments failed woefully to implement the recommendations contained in part 1 and we are all now paying the price. The House must ensure that the Government do not fail, as past Governments have done, to implement the bulk of Lord Shackleton' s report.

8.21 pm

Mr. Eric Ogden (Liverpool, West Derby)

The hon. Member for Winchester (Mr. Browne) is one of the few hon. Members who knew anything about the Falkland Islands before 1 or 2 April. If, at the time of the first report, in 1976, we had had available the information we now have, the Government would have done much more, because there would have been great pressure from the House. The course of history might have been changed.

I might disagree with the hon. Member for Winchester about where the southern flank of NATO should be, but I do not think it is right for the hon. Member for Hamilton, (Mr. Robertson) to cackle at him. Some Opposition Members discovered where the Falkland Islands were only after April 1982.

Mr. George Robertson (Hamilton)

We do not need to know where the Falkland Islands are to know that they are not, by any stretch of the imagination, the southern flank of the NATO area.

Mr. Ogden

I might agree with the hon. Gentleman, but it was perhaps ill-mannered of him to cackle at what was being said rather than to listen to see whether there might be something in what the hon. Member for Winchester was saying.

We all know that the economic development of the Falkland Islands cannot be isolated from its geography and history, or from its economic links with other countries in the area. To those who say that we should be looking for a British political or defence initiative, I say, please try to leave well alone at present and let the status quo be a little static.

Whereas what hon. Members say in the House is understood by us in the way that it is meant—and I say this to Opposition rather than Conservative Members—the way that their words are interpreted in the Argentine and South America, not just by our temporary enemies but by those who hope to be our friends, results in the opposite impression to what those who are putting forward the proposals intend.

I want to speak about the future economic development of the Falkland Islands. The costs of defence and development have been mentioned. We sent the task force to the Falkland Islands to liberate the Falkland Islanders. Our first thought was for them, but we also had to take that action in our own interest.

The economic future of the Falkland Islands is just as much in our interest as it is in the interest of the Falkland Islanders. However, I do not mean that in the narrow sense. The hon. Member for Uxbridge (Mr. Shersby) and I were on farms in the Falkland Islands 15 months ago and the tractors and equipment were wholly British. The ratio of British equipment and machinery in Stanley is greater than in many parts of Liverpool or Birmingham or other parts of the United Kingdom. Therefore, we have direct and indirect interests in the development of the Falkland Islands.

I am critical of the strictures uttered by the hon. Member for Hackney, Central (Mr. Davis) concerning the Falkland Islands Company. It is not enough for the hon. Member to be well briefed, although the hon. Gentleman is obviously well briefed and has his collection of newspaper cuttings. When he puts them all together, he can make a case, but a collection of cuttings and letters do not make a policy. He should try to put himself in the position of any company operating in that society and economic climate. He might then accept that his strictures were exaggerated. The Falkland Islands Company is neither the best nor the worst of the companies operating in that area. The FIC has operated in its own time, in its own way and in its own environment. We should not expect that company to be the same as a company working against competition in England. Therefore, I defend the Falkland Islands Company against unfair criticism.

The hon. Member for South Ayrshire (Mr. Foulkes) said that Coalite had made a profit of £25 million. He let us assume that the profits of the FIC were £25 million when they are much much less than that sum. The assumption was that some of that money should have gone to the islands. I agree with the hon. Member for Hackney, Central about the need for more investment, but hon. Members should bear in mind the economic climate of the Falkland Islands. We might then make some progress.

I welcome the report of Lord Shackleton and his colleagues, and the Government's response, so far, to its recommendations. I thank the Minister for the further information that he gave the House today. I think that he will accept that I am being rather more generous to him than he was to me earlier today. I strongly stress that we should make it possible for the Falkland Islanders to take their own decisions about their own economic development, instead of continuing the practice of 150 years in which Parliament or London companies decided what would happen and the islanders either liked it or lumped it, but made no decisions of their own.

My plea is that we should provide the Falkland Islanders with the means and finances to take their own decisions about their economic development at their own pace. They know the situation best. The Minister cited two examples earlier. There is a hostel that might have been ideal in the Bahamas, but which was far from ideal in Stanley and the 12-mile of the Darwin road. The islanders said that a ditch was needed on either side of the road, but the people in the Overseas Development Administration said "Nonsense, you can do very well with one." Long before the invasion, the state of the road showed that two ditches were needed. Just as my hon. Friend from Scotland know best what sort of roads and other developments should take place in Scotland, the islanders can best decide on their own development.

That is a change of emphasis, because the islanders have grown accustomed to the idea of others making decisions for them. Such a rut can be a very comfortable one to be in at times. While the rut is not exciting, there are no responsibilities. The more we can return the decision-making process to the islanders, the better it will be both for them and for us.

At some time, there will be a need for a new Government of the Falkland Islands Bill to bring forward a much more democratic and effective system of government in the Falkland Islands. That time is not now although perhaps next year would be appropriate. Trade union legislation, employment protection and other provisions should be included in the Bill.

When the hon. Member for Uxbridge and I returned from the Falkland Islands 15 months ago, we reported to the Foreign Office, to the then Minister of State, the hon. Member for Shoreham (Mr. Luce). The Foreign Office staff took careful note of what was said, as they always seem to do when I visit it. The first point that we stressed was the need for the Falkland Islands to have their own voice in London—what we called the Falkland Islands Government Office. The Independent Falkland Islands Committee has done valiant work during the past 12 months and before then. The Committee is an honourable creation but it is part of an independent pressure lobby like any other lobby. However, it does not represent all the people of the Falkland Islands. The best way for that to be achieved is for the Falkland Islands Government and people to have their own office in London. The office could speak for all of them. The Falkland Islands all-party group can support them, but they would be independent of the Foreign Office, of charity and of the House of Commons.

I understand that such an office was to have been set up in November. A stalwart gentleman called Adrian Monk was to have been commissioner of the Falkland Islands Government Office in London. He was once referred to as the only real politician in the Falkland Islands, and credited, or discredited, as the man who shot down in flames the lease-back proposals.

That proposal was timed for November, but is not yet established. The Minister now speaks of it being established in the new year. In the meantime, the Falkland Islands Association, the Falkland Islands Committee and the Falkland Islands Office have virtually stood down. They say "We wish to let the Falkland islanders have their own voice. We shall pull out, but give support". There is a vacuum of information. I should appreciate information from the Minister. The key issue affecting the future of the Falkland Islands is the Falkland Islands development agency. The Minister knows that I treat him with great respect, matched only by a great suspicion from time to time about some of the things that he does. Why the wording "Falkland Islands development agency"?

Lord Shackleton and his colleagues recommended that this body should be modelled on either the Highlands and Islands Development Board, the Merseyside development corporation or the London Docklands development corporation. Those who recommended the establishment of such a body to Lord Shackleton and ourselves never used the word "agency". That word assumes—perhaps "subsumes" is a better word—that the body is acting on behalf of someone else. I wish it to have the independence that Lord Shackleton describes in his report.

What finances will be available? No one suggests that the agency should have funds similar to the London Docklands development corporation or the Merseyside development corporation. Roll-over investment could be considered, where the funds are invested and returned to be reinvested. The lack of development in the Falkland Islands has been caused by lack of finance. Falkland Islanders who want money to invest go to the Government. They cannot go to other financial institutions that are available in the United Kingdom. A development agency that would control development and investment in the Falkland Islands and that would be based in the Falkland Islands is essential, although it could be supported by expert help from the United Kingdom.

The Minister said that that proposal would require Falkland Islands Government legislation. Will it require United Kingdom legislation similar to that provided for the Merseyside development corporation or the London Docklands development corporation? I do not ask the Government to nationalise the Falkland Islands. Lloyd George rightly said that the land should belong to the people. I see nothing wrong in the report, which states that the Government should take over the freeholds and then let the land to the islanders over a period. The Minister is always careful with his words. He said that if land or farms become available, there is no reason why the Falkland Islands Government should not buy it, either themselves or through the agency that has not yet been set up. I tried to intervene at that point in his speech to explain, as he may already know, that Fox Bay East farm is available now. Why should the Minister say "if land becomes available" when he knows that that farm is available? The Minister can confirm that both Green Patch and Roy Cove have been eminently successful.

Mr. Onslow

I said not only "if land should become available", but "if an acceptable price can be agreed". We should not forget our obligations to the British taxpayer and the duties of the Public Accounts Committee, as scrutineers of expenditure. It is essential that any bargain is fair to both sides and justifiable as a transaction with public money. It cannot be an unconditional commitment.

Mr. Ogden

I would not wish it to be unconditional. My experience of shopping in the Falkland Islands is that the shopkeepers drive a very hard bargain.

The road system must be improved by providing a ring and spur road on East Falkland, both north and south, and a ferry to West Falkland. Reference is made from time to time—both the hon. Member for Bolton, East (Mr. Young) and the hon. Member for West Lothian (Mr. Dalyell) mentioned it—to the "islanders' economic dependence on Argentina". The hon. Member for Bolton, East would appear to believe that every aeroplane that flew in and out of Port Stanley and Comodoro Rivadavia was full of either bread, or people going to shop at Harrods in Buenos Aires or the islanders' dry cleaning. We know that it was not like that and I hope that other people realise it.

Our priority should be to provide the facility for the islanders to have their own voice in London and their own development agency that we can fund to begin with as a pump-primer. That will be best for peace and security and will be the best way to ensure that the islanders have the opportunity to make their own decisions. It is also the best way to ensure that their future is more prosperous and more safe than their past.

8.37 pm

Sir Hector Monro (Dumfries)

It is always a pleasure to speak after the hon. Member for Liverpool, West Derby (Mr. Ogden), who has been a long-term enthusiast and is extremely knowledgeable about the Falkland Islands.

Yesterday was the day to debate the military aspects of the episode, but I have two sentences to say about that. After visiting the Falkland Islands last month, seeing the battlefields and appreciating the immense distance from Britain and the difficult terrain in the islands, I was full of pride for the bravery and brilliance of our Service men. We should be extremely grateful to the Commonwealth War Graves Commission for making the war cemetery at San Carlos into a place of great beauty. It was moving to stand there surrounded by the graves of our fallen men, as it was to see the Parachute Regiment monument at Goose Green to Colonel H. Jones and his colleagues and the Guards' memorial at Fitzroy.

Lord Shackleton' s entire report is important, but the most important aspect is his recommendations on farming. We should consider those proposals and the Government's response. No one could be an expert after only 12 days on the islands, but as I am a farmer with some experience of hills, and as I had the opportunity to visit the settlements, especially the new small farms, and to have listened to the farmers, I came to certain reasonable conclusions that are not dissimilar to those announced by my right hon. Friend the Secretary of State on 8 December and again by my hon. Friend the Minister of State today.

We must concentrate on the short and mid-term development of farming. That is the only way in which we can make a major impact on the islands' economy in the next few years. Another important aspect of the Shackleton report concerns the deep-water jetty.

The substantial improvement to the income of the islands must come from wool. However, the price of that wool will be relative to world prices which, sadly, have been falling. We must not look solely at that aspect, but also to the future. The quality of Falklands wool will enable it to be pitched at a relatively high level in the market scale.

Lord Shackleton calls for an early transfer of the large farms to island ownership and suggests that they be reduced in size. This radical proposal also includes compulsory purchase. From studying the report, I am not sure that the Shackleton team was confident in making that recommendation.

Three significant extracts can be taken from the report. On page 11 it says that there is no sustained evidence that smaller farms will increase agricultural productivity, and will certainly lower the tax revenue of the Falkland Islands Government.

Page 17 states: The pace and extent of small-farm creation will depend not only on the numbers of suitable owner-occupiers who can be found but also on the provision of the necessary infrastructure.

Thirdly, and more importantly, page 58 states that It is too early to draw any firm conclusions on small farm policy.

Shackleton is making major recommendations without evidence. Perhaps he is thinking of a steady evolution after an assessment of current developments. That is not far removed from the present position of the Government. As hon. Members have said, relative to this policy, it will be interesting to hear the views of the islanders.

With the help of Sir Rex Hunt and General David Thorne I was able to go with Mr. Bill Goss, who is well known to some hon. Members, to visit the two large farms that were split into six small ones at Green Patch, and on West Falkland at Roy cove. I was very impressed. The Green Patch farm was reduced in size only in 1980. Allowing for the problems of war damage, the six farmers were confident that they would be financially viable in the future, thereby repaying the loans that they had received at favourable terms from the Government.

Naturally, there are difficulties—I think they can be overcome—in respect of the jetty, the shearing shed and so on. It is important in this context to accept that as small farmers move out of the large settlement, we are denuding that settlement of work hands. It makes the education of the young children more difficult. The small-farm policy may well provide less employment in agriculture than at present.

The small farms of 12,000 to 15,000 acres with 3,000 to 4,000 head are viable. I was favourably impressed. I found this view reinforced when I went to Roy cove on West Falkland. The six farms have been operating for 13 months, from October 1981. It is important to realise that there were very few more than the six firm applicants for those six farms, and that only two applicants were from outside the island.

A year ago there was great concern about the political future of the islands. A large number of islanders did not come forward to apply for the farms. We must bear that in mind in the future. The feeling was one of confidence, provided the price of wool could be maintained. I went with Bill Goss to see Bill Luxton of Chartres who is one of the most successful large farmers in the islands and talked to him about the policy.

I also looked at Fox bay, which is the key issue. If we can purchase that farm at a fair price and convert it into six or seven smaller farms, we shall make substantial progress towards implementing the ideals of Shackleton. By doing so, we shall over three years have created 18 or 19 new small farms, and will have increased the number of farms in the islands by about 50 per cent. We must have time to digest this proposal, and give both the Falkland Islands Government and the British Government time to consider how this development has changed farming practice on the islands. An early purchase of Fox bay at a reasonable price is important to show that this is our policy. I should also like to see Fox bay developed as a settlement.

I wholly support FIDA as an executive agency with an advisory board. It is important to give financial assistance to the grasslands trials unit. Along with Mr. Tom Davies and Mr. Steve Whitley, the vet, I talked with their colleagues about the unit. I saw the trial plots on the far side of the bay, that were, mercifully, unmined, and I was impressed by how the new seed mixtures were settling down. If we can improve the pasture land in the camp, we shall be able to increase the stocking rate, which is important in the production of wool.

We must concentrate on wool. As Shackleton rightly says, mutton will not have a viable future and nor will beef. However, in the short term we must explore the possibility of developing a market for beef and mutton for the Service men, either through the slaughterhouse or via a slaughter ship that can visit the settlements, pick up livestock and transport it back to Stanley.

The grassland trials unit is a key factor. However, the unfairly maligned Falkland Islands Company improved 2,000 acres of grassland, even though there was a lack of fertiliser and lime. We cannot continue apace with re-seeding without assimilating each step at a time.

In developing the grassland trials unit in conjunction with the agricultural officer, it is important to have in the latter post a man of real substance who can lead the farmers towards greater productivity. It will not be easy. There will be all possible help from Sir Rex Hunt and his team, but in terms of farming we need someone with knowledge and strength of character. I hope that that will be borne in mind by the authorities in making the appointment. All in all, I was impressed with the grassland trials unit and wish it well in the future. I could talk at greater length about farming, but I do not have time.

As to an aerodrome, I personally believe that we must develop the airport at Stanley. The possibility of going elsewhere, either to March Ridge or further afield, is wholly impracticable and out of the question in financial terms. I think that I was only one of two hon. Members who looked at the east end of Stanley runway, and I am quite convinced that we can extend it by another 2,000 or 3,000 ft. without too much difficulty. The only difficulty is reconstructing the airport while at the same time keeping it operational for the defence of the islands. That is not beyond the bounds of possibility. We must widen, strengthen and lengthen it. That will be infinitely less expensive than starting elsewhere, where there might be no noticeable improvement in the weather, and we would have all the problems of access by road and sea. Therefore, we should think only in terms of an important development at Stanley.

The steps that the Government announced are right. My hon. Friend broadened the story today in his valuable speech. We are putting an enormous sum into the islands, and in my view that is right. However, it is also important to go step by step, along with the Legislative Council and the Islands Council, taking the islanders with us and encouraging them to take all the initiatives that they can. Then the economic prosperity of the islands will improve month by month. The spirit is willing, but we need as much leadership and drive as we can get. I am confident that the Government have made a valuable start. They have shown their determination that the future of the Falklands will be sound and profitable.

8.50 pm

Mr. Tam Dalyell (West Lothian)

I am in the position of the bad fairy in this debate, because, in my view, Lord Shackleton's political judgment is as appalling as he himself is charming. Fifteen years ago we quarrelled east of Suez. I thought that he was a disastrous influence on the first and second Wilson Governments as a Defence Minister. It was east of Suez then; it is the South Atlantic now. His report is basically ill conceived. It commits us to a Fortress Falklands, when we should recognise that the facts of geography are against us. We should indulge no longer in what is a preposterous national escapade.

In particular, I am concerned about our relations with the United States. The vote of the United Nations, far from being what the Prime Minister called an aberration, was in keeping with the long-term interests of the Americans. They will resent more and more our bitching their relations with their southern neighbours. Indelicate though it may be, I recall that on 4 April Alexander Haig said that the Falklands were a pimple on the arse of history which had to be squeezed. I believe that that was the general American view.

I also take the view, unpopular though it is, that in this matter the officials of the Foreign Office, who have been greatly maligned throughout the argument, have been sensible, and many of them courageous, in recognising reality. I deeply resent the Prime Minister's attitude of throwing her handbag at the Foreign Office officials at every possible opportunity. It is bad to have not only a second Foreign Office in the form of Robin O'Neil and others in the Cabinet Office, but a third Foreign Office with Sir Anthony Parsons and his staff. I go on record as saying that in the past 17 years the Foreign Office has behaved over the Falklands in keeping with the best interests of Britain and the reality of the modern world.

We are talking about a village. I tell my Scottish colleagues that Reggie Elliott, who was chairman of the Conservative Party of Salin in Fife, resigned from his post on this issue. He has an Argentine wife, and knows something about the matter, but he makes it clear that we are talking about something smaller than the village of Salin in Fife.

Now we are talking about a newly appointed Attorney-General for 1,800 people. Of course the issues are grave, but if we go on as we are we shall be putting in jeopardy, among other things, the world banking system.

As I too must talk in shorthand, I should like to record my total support for the Treasury and the governor of the Bank of England in insisting that we should be part of the international package to do something to help the Argentine economy. The reverse of that coin is the same as has happened in Mexico and Brazil, which will mean that we shall have great problems—and for what?

I ask the Minister a direct question. How much private capital will go into the Falklands? I am told by Ralph Emery in the City and others who negotiate with the Bank of England that there is jolly little private capital going in, for the obvious reason that it will not be invested in the Falklands before there is some prospect of that being done in conjunction with the good will of South America. That is a fact of life.

The Minister says that we shall push ahead with the economic development of the Falklands. That cannot be done without the co-operation of their neighbours. The hon. Member for Gosport (Mr. Viggers) talks about military training in West Falkland. I cannot imagine a redder flag to the South American bull than that. The Minister says that life on the islands will return to normal. One of the results of what we have done is to bust up the Falklanders' fragile way of life. I might be in agreement with the hon. Member for Liverpool, West Derby (Mr. Ogden) on that. The fragile way of life of the Falklanders has been completely wrecked. If we are to return to anything like normal conditions, I am afraid that must brutally say that that will mean Argentine sovereignty on the same basis as their relationship with the Welsh communities in southern Patagonia, who continue to speak Welsh if they wish and certainly continue to play rugby.

One can say, "What about those Falklanders who above all want to be British?" If above all they want to be British, they can come to the Thames valley. I get the impression, and have done ever since the mid-1970s, that those who have made most noise from the Falklands have in fact spent a great deal of their time in Britain. Many of the genuine kelpers sent their children to Buenos Aires for their secondary education. If it is said that it is a great imposition to learn Spanish, I say that if one is to have a medical operation it might be quite a good thing to have a smattering of the language that one's doctor talks.

Mr. Ogden

To suggest that sending some kelpers' children to private schools in Buenos Aires implies a dependence on Argentina is rather like saying that Liverpool's education facilities depend on our ability to send Liverpool children to Eton.

Mr. Dalyell

We have not been told what will be done about secondary education. We have heard about primary education—all those schools and travelling teachers for 1,800 people. For primary education in Hamilton, West Lothian or elsewhere, one school would be sufficient.

There is a growing resentment, which I share, that all this money should be spent when we have the most appalling problems in our constituencies. This Christmas 12 miners will spend Christmas down the Kinneil pit. I do not fancy the idea of a sit-in down a colliery for the first time in Britain. It is a delicate issue on which I talked to Mr. Scargill and Mr. McGahey and many others. The National Coal Board has had to do it because the Secretary of State—

Mr. Deputy Speaker

Order. The hon. Gentleman must relate his remarks to the Shackleton report.

Mr. Dalyell

If that is not the right comparison, what about help to others areas of the Third world? The same money would be much better spent by the British Council. I ask the Minister how much the compensation claims amount to. What are the sums involved in these major roads? United Kingdom contractors might be a small mercy since many of the housing contractors went to Sweden. How much will the hospital, geriatric care, and so on cost 8,000 miles away?

I also understood Shackleton to say that air links were crucial. When I asked him about this he said "90 per cent. right". How big an airport is needed? My hon. Friends have asked some pertinent questions about this issue. Will it cost £30 million or £300 million. What will be the cost of a shipping service?

I am worried about the "Uganda" plying between Ascension Island and the Falklands. Unlike the hon. Member for Inverness (Mr. Johnston), I do not believe that there may be a capricious attack, but he may be right in using the word "capricious" in terms of a revenge strike. What will happen if, albeit irrationally, it is decided by someone in Buenos Aires that because of the way things are going an attack will be made against the "Uganda"? Cover is needed both for shipping and for the perilous refuelling of the Hercules—

Mr. Deputy Speaker

Order. I am reluctant to interrupt the hon. Gentleman, but we dealt with that matter yesterday. He must relate his remarks today to the Shackleton report.

Mr. Dalyell

Links are absolutely crucial. Shackleton said that air links are crucial and I am asking about refuelling and the cost of the conversion of Tristars. It may be fine for Marshalls of Cambridge but the rest of us will have to pay for it. We shall have to pay in many ways. I should like to draw attention to one way. A headline in the Daily Express of 21 December read "Snubbed Brazilians axe England game". After all the questions I have asked at Question Time, I do not blame Ministers for being rude to me, but I should like to ask a serious question. When will we ever get landing rights in South America?

We have heard about the recruitment of suitable settlers. Who has applied? This appears to be like the colonisation of Algeria.

If there is to be defence and a lasting presence, will nuclear weapons be involved? The Stockholm International Peace Research Institute has said: There seems no doubt that, if any nuclear weapons were on board any of the British ships engaged off the Falkland Islands, the United Kingdom was in breach of its obligations under Protocol I of the Treaty of Tlatelolco, which it signed on 20 December 1967, and ratified on 11 December 1969. I should like a Foreign Office comment on this matter. SIPRI continues: Under article 1 of that Protocol, the United Kingdom undertook to apply the statute of denuclearization in respect of warlike purposes as defined in articles 1,3, 5 and 13 of the Treaty for the Prohibition of Nuclear Weapons in Latin America in territories for which, de jure or de facto, it is internationally responsible and which lie within the limits of the geographical zone established in that Treaty. The Falklands lie within the limits of the geographical zone established in that Treaty. Article 1 of the Treaty, referred to in Protocol I, clearly requires the total absence of nuclear weapons, by prohibiting, inter alia, the receipt, storage, installation, deployment and any form of possession of any nuclear weapons, directly or indirectly, by the parties themselves, by anyone on their behalf or in any other way. (The definition of nuclear weapons given in article 5 of the Treaty is broad enough"—

Mr. Deputy Speaker

Order. I am sure that the hon. Gentleman wishes to be fair. We must not deal with such matters in a debate on the future development of the islands.

Mr. Dalyell

One cannot develop the islands unless one defends them. What is the Foreign Office view on SIPRI's view of the Treaty of Tlatelolco?

9.3 pm

Mr. Michael Shersby (Uxbridge)

Unlike the hon. Member for West Lothian (Mr. Dalyell), I should like to add my congratulations to Lord Shackleton and his team on producing a very good mark 2 report. My view is based on my own experience of visiting the Falkland Islands in September 1981 together with the hon. Member for Liverpool, West Derby (Mr. Ogden). At that time, I spent two and a half weeks visiting settlements in the islands before the conflict broke out. I had the opportunity of having useful and prolonged discussions with the islanders about their future. I am pleased that my right hon. Friend the Foreign Secretary was able to announce on 8 December the broad acceptance of some of the important recommendations in the report. I am glad that my hon. Friend the Minister of State has been able to amplify them today.

The setting up of the Falkland Islands Development Agency is the right course of action in the circumstances. I hope that the agency, which I understand is to report to the Falkland Islands Government, which in turn will report to the Government of the United Kingdom, will be able to operate in an independent manner. I hope also that it will not be hampered or restricted in its activities by unnecessary references to Whitehall. During my visit to the islands, I found that sometimes the most elementary decisions had to be referred to Whitehall. Sometimes even weeks would pass before some of the more difficult decisions were taken. I hope that the agency will be able to achieve speed of action.

I am glad that the agency will have funds to buy land on the open market and to divide it into smaller holdings. I agree that there is a need to get land at a price that is fair to the British taxpayer, and I am pleased that my hon. Friend the Under-Secretary of State has that in mind. I am one of those who welcome the gradualist approach that was announced by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs on 8 December. From the discussions that I have had with the islanders, both when I was there and since, I am convinced that they could not cope with wholesale and immediate land redistribution. Consequently, timing is an essential element.

I support fully the wise words of my hon. Friend the Member for Dumfries (Sir H. Monro) in his admirable speech in which he brought his great knowledge of farming to bear on the problem. He observed that when farms came on to the market in Roy cove—they were being advertised for sale while I was there—only a limited number of buyers came forward. I think that only four prospective buyers came from the islands. The redistribution of farms into smaller units and resale to new owners is not a process that can be rushed. This is clear from the sales of farms which took place prior to hostilities.

If more of the islanders are to own their farms, funds must be made available by the new agency, and perhaps it should also provide advice and even farm management training. It may not be possible to achieve a major redistribution of the land in the shorter term, even with the benefit of the funds that are available from the agency and even if absentee owners are willing to sell. The population is small and not every islander wants to own his or her farm or is capable of managing a farm. It is clear that migrants are needed from the United Kingdom who are willing to make their lives on the islands and who have the necessary training and experience to be successful farmers. I am glad that my hon. Friend the Minister of State said in his opening speech that the agency will be given a specific role to encourage migration from Britain and to help those whose training and experience would enable them to make a useful contribution to the economy.

If that is to be possible, there must be a vigorous housing programme. There is nowhere on the islands for migrants to live in any numbers. I know that this is very much in my hon. Friend's mind and I hope that he will say more about housing when he replies to the debate. I hope also that we shall hear more about the widening of land ownership, to which he referred earlier. He talked about financial means and I shall be grateful if he will enlarge upon that.

I was pleased that on 8 December my right hon. Friend the Foreign Secretary talked about the expansion of the harbour complex. Will this include the possibility of improving facilities for the offloading of oil by pipeline instead of by drums as at present? Do those proposals include any changes in oil storage arrangements? When I was there, I was quite surprised to find that there is a rather primitive way of unloading oil from the tankers that then brought it from Argentina. It is clear that a more modern system is essential.

I shall now deal with Lord Shackleton's recommendation that the road network in the Camp should be expanded once the Stanley to Goose Green road has been completed. I am pleased that the Government have decided to complete the road. I make a strong plea to my hon. Friend the Minister that a good job should be made of it. A proper tarmacadam surface, rather than the rough gravelled one that is now provided, is needed. A proper road would facilitate rapid overland transit and enable the development of Darwin as a second town of reasonable size as the economy of the islands expands. It would also give access to the great plain of Lafonia. A proper tarmacadamed surface would also permit proper drainage and it would be more durable.

Presumably the Falkland Islands Government will have to bear the recurrent cost of repairing the road. We must therefore ensure that they have both the materials and the equipment to keep that and other roads in a decent state of repair. I am sure that my hon. Friend the Minister has travelled on that road. I hope that he will agree that a gravel surface simply will not do. Can he also say what the Government mean by the statement that the existing network of tracks is to be improved? Some islanders told me that the Stanley to Darwin road will not serve enough of the settlements in the Camp to justify the expense. Will the improvement of the tracks help to meet that complaint? How will the improvement of the tracks meet the infrastructure needs of the small farms in the Camp? It seems that another major road is not planned. I wonder whether we are perhaps proceeding a little too slowly.

I was interested to hear earlier about the hospital and the possibility of building a new one. I pay tribute to the people who work in that fine hospital in Port Stanley. I must tell my colleagues who have not been there that it is an excellent hospital. It is beautifully situated and has first-rate staff. When one visits the hospital, one notices the number of elderly people who are cared for there because they can no longer live in the settlements in the Camp. Obviously my hon. Friend the Minister has in mind the need to provide special accommodation, perhaps sheltered accommodation, for those people. That would release much needed facilities in the hospital.

My hon. Friend also referred to the school hostel in Port Stanley. Of all the structures that I have seen in Britain and elsewhere, it is one of the most extraordinary, not only in its appearance but in its design and in the materials used in its construction. I would almost go so far as to say that the way in which it has been handled in the past few years is little short of a public scandal. It has never been occupied by the children for whom it was intended. The hon. Member for West Derby and I thought that it was downright unsafe.

I should like to hear more about secondary education for children in the Falkland Islands. I recall that arrangements have been made in the past for youngsters who have taken their O-level course to go on to a school in Rye in Sussex. I do not know whether that arrangement still exists or whether alternative ones are being made.

I am glad that the Government will explore the possibilities for offshore fishing. The hon. Member for West Derby and I studied the subject while we were there. We went aboard the Polish factory ship and watched them turning fish into fish meal. Apparently, that is profitable activity for the Poles. They also caught substantial quantities of squid for prompt export to Spain and Italy. The next time you enjoy calamares romana, Mr. Deputy Speaker, you may in fact be eating calamares Port Stanley. Perhaps we can learn from the Poles with regard to fishing. I hope that we shall be able to come to some arrangement with the Polish fishing fleet over a base in South Georgia.

I should like briefly to mention air communications. This is one of the most important recommendations in the Shackleton report. Sea communications with the Falkland Islands have in the past been one of the major means of transporting heavy equipment, goods and materials to the islands. It is clear that these will have to be continued. I believe, however, that the Government should, and will eventually, be able to reach some agreement with Chile for a commercial air service via Punta Arenas.

I was told in the islands that it would be possible for an aircraft of the BAC 111 type with longer wings and a shorter fuselage to use the existing runway at Port Stanley. If the runway is extended, that will certainly be possible. I should have thought that this development, together with a possible link with Punta Arenas some time in the future, would provide the air service that was needed. There is, after all, a regular twice weekly service from Paris to Santiago.

There are regular air links by Lan Chile or Cadeco Linea between Santiago and Punta Arenas. That is obviously the airport for which we should go. It is only 470 miles from Port Stanley and a much shorter distance than that involved in the original air service between Comodoro Rivadavia in Patagonia and Port Stanley. I hope that my hon. Friend the Minister will not be discouraged by those hon. Members who have reservations about the Chilean Government and their policies. I am sure that most hon. Members have reservations about every country in South America. We have to make our friends as best we can.

I hope that relations can be developed with Chile in the same way that I hope that it will be possible, in the fulness of time when the scars of this conflict have healed, to develop our friendships with the many people in Argentina who admire our country and who dislike and distrust their Government as much as we do.

I welcome the Government's response to Lord Shackleton's report. I urge the Minister to press ahead with all speed in the knowledge that many hon. Members will give him the strongest possible support.

9.17 pm

Mr. George Robertson (Hamilton)

This has been an interesting and thorough debate. As one of the few hon. Members who have sat through practically all the Falklands debates, starting with the high drama of the debate on the invasion, I am aware of the great displays of emotion that have characterised the whole episode. It is interesting that hon. Members have kept today's debate at a consistently low emotional level. The affairs now under discussion were bound to be the business of the House once hostilities had ceased. The matters involved are of some importance.

I wish to join those hon. Members who have congratulated Lord Shackleton and his team on their report. I was born in the islands of Scotland. I wish especially to thank the Highlands and Islands Development Board, which provided two senior staff members to bring the report up to date. Their invaluable assistance should be recorded. We have an authoritative and comprehensive report on the circumstances applying in the Falkland Islands today. Its publication brings up to date the report of 1976 which was, in its own way, thorough.

The report enables hon. Members to look to the future in the aftermath of the conflict that cost so much and for which so many people made the supreme sacrifice. I wish to pay my tribute, as the Minister did, to the troops who, since the retaking of the Falklands, have done so much to bring the islands and the conditions of the islanders back to normality.

The report not only exhaustively examines the present circumstances in the islands but gives a scenario for all the diversification there could conceivably be in the future. It exhaustively considers even the marginal options that might have been suggested before and during the conflict. I can find only one comment from any outside source which the report failed to consider. The Secretary of the Clydesdale Horse Society, Mr. John Fraser, suggested that there might be a use for the rugged Clydesdale horse in the terrain of the Falkland Islands. Apart from that, I believe that the report has come to a fair conclusion about the alternatives open to us and to the islanders.

Any consideration of the future of the Falkland Islands must start with an objective, and the objective can be defined only by a combination of Parliament and the islanders themselves. As my hon. Friend the Member for Hackney, Central (Mr. Davis) pointed out, the Shackleton report makes it clear that the objective of a community of fewer than 1,000 people defended by a garrison of 3,000 or more, with an economy surviving principally on the income from stamps, is unacceptable. So, too is what The Guardian recently described as a fortified welfare office in the South Atlantic. Those options should not form the basis for our consideration of the future of the islands. There must be a viable society. The people whom we went to defend and whose rights we went to reinforce must have their own roots, their own lifestyle and their own sense of independence. That is the objective in the light of which we must consider the Government's attitude to the Shackleton report's recommendations. It is a prerequisite of any long-term political framework which might be established for the Falkland Islands in the future.

The future of the islands cannot be dealt with in a vacuum, as though external circumstances did not exist. Our eventual aim must be international acceptance, which is the only real security for the Falkland Islanders. In the meantime, it is crucial that the islanders should have a real stake in their own future. That is why the kernel of the recommendations about sub-division of the farms is so important and why the Government's failure to accept those proposals is so disappointing.

The report's analysis of the economy does not present a bright picture. However much we may want a bright future for the Falkland Islands, the report points out that the economy of the islands has an underlying tendency to decline. If no radical action is taken now, that decline and the accompanying depopulation will continue. The report rightly underlines the fragility of the social structure of the islands, which could easily be endangered, accelerating the decline, if the existing balance were artificially disturbed. As my hon. Friends the Members for Bolton, East (Mr. Young) and West Lothian (Mr. Dalyell) have pointed out, we are concerned not with a gigantic international community but with a tiny community of 1,800 people—about as many as attend the largest secondary school in my constituency. The fragile social balance on the islands could easily be disturbed by well-meaning people from outside and especially by the effect of the garrison.

The report rightly stresses the importance of isolating the effects of the garrison as much as possible from the social structure of the islands so that the previous pattern of dependence—on Argentina, on the one large company in the islands and on the United Kingdom—cannot easily be transferred to the garrison. Experts from the Highlands and Islands Development Board area have compared this with the development of Sullom Voe in isolation from the social fabric of the Shetland Islands. Ministers should bear that important example in mind.

The report also emphasises the importance of retaining profits on the islands and increasing self-generated investment there. It points out that the structure of ownership, the lack of financial institutions and the failure of recent controls have led to a disgraceful drain of investment funds from the islands. In the past five years £1.1 million was lost from the islands—more than the total investment over the same period.

The report calls for radical solutions to reverse the decline endemic in the economy of the islands, to build identification and to break down the attitude of dependency that existed previously. It also stresses the need to give young people in the islands—and young people from the islands who are perhaps no longer there—a stake in their own future, to build a spirit of initiative and independence. One would have thought that that would appeal to the Prime Minister and the Government, so it is sad to see the Government abandoning the principal mechanism that the Shackleton team believed would achieve that spirit.

A number of hon. Members have referred to the ownership of land. As a Falkland farmer said to me this week, this is the teeth of the report. Despite the ambivalence of certain sections of the report, to which the hon. Member for Dumfries (Sir H. Monro) referred, the report is clear about land reform. Paragraph 2.5.1. states: We are of the opinion that a radical solution is required to stem the flow of funds from the Islands and to encourage reinvestment of profits. We reach this conclusion because of the combination of facts and circumstances relating to the existing absentee-owned farming operations in the Falkland Islands, which are likely to render other non-structural attempts to deal with the problem largely ineffective. The following paragraph adds that without a concomitant change in ownership pattern the danger is that a principle medium-term effect of such allowances and grants might be simply to raise all the levels of undistributed profit remittance to the UK. The teeth of the report are in the land reform aspect of the recommendations. Why, therefore, has the radical nature of the proposal been so pre-emptively cast aside by the Government in considering the sub-division of disproportionately large land holdings in a series of islands where the present system has been clearly proved to be against the interests of economic viability?

The Minister's opening speech cast doubt on the state of opinion in the islands. In his speech welcoming the original Shackleton report, the Foreign Secretary 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 … We shall start on a small scale and then see what develops. Members of the Shackleton team have repeatedly told me this week that they made no proposals for wholesale sub-division, so hon. Members who have continued to make that accusation today misconstrue the recommendation. The proposal is for a radical sub-division of the farms. The timing and phasing of it will depend on the circumstances prevailing in the islands. There is a clear difference between the idea of wholesale nationalisation, which some Conservative Members have been promoting as being what Lord Shackelton said, and the reality of the proposals, which are for a long-term phased programme of breaking down the existing holdings.

The Foreign Secretary was to go on further in his replies and say: The Government do not believe that to be the best approach, nor is it the general wish of the islanders."—[Official Report, 8 December 1982; Vol. 33, c. 860–862.] The Minister who visited the islands apparently spoke to some people out there and, in an on-the-record briefing when he returned, was heard to make the same comments that he has repeated this evening.

My hon. Friend the Member for Hackney, Central dealt at some length with islanders' opinion as it has manifested itself in the United Kingdom. He quoted a farmer who owns farms in the Falklands and who has spoken in the past few weeks during the period when the Minister was on the island. He disagrees violently with the Minister's interpretation of local opinion. The elected representatives of the Falklands in the Council came to the conclusion that the Shackleton report should be accepted and were vociferous in their support.

Mr. Gavin Young's article in The Observer, apart from the ideas quoted by my hon. Friend, said: Many islanders see Mrs. Thatcher's silence on this point as a dismal sign that, because of doctrinal Tory opposition to Government takeovers, she cannot and will not act on this recommendation, one that is most dear to Falkland hearts and minds. It is on this point that resentment could flourish. There is a considerable body of opinion that suggests that the Minister misunderstood some of the reservations that the islanders had about the recommendation on land redistribution and the sub-division of the farms. There are certainly those on the islands who do not wish to see an immediate changeover, and who think that any limbo that might occur could lead to a rundown of profits and a lack of cultivation of the holdings. However, as that was never part of Shackleton's recommendations, that was an unfounded misapprehension, and the Minister has misunderstood the nature of the reservations that the islanders hold.

It is also important to pick up some of the points made about the success or the failure of the existing sub-divisions. It is a fair point to make that there was difficulty in letting the last two farms that were sub-divided, but the circumstances are clearly different now from the circumstances when the farms were sub-divided. Those who know the islands and island opinion believe that if there were proper training and encouragement there are people, both on the islands and who have left them, willing and able to go back to farm the sub-divided areas.

I put my next point to the hon. Member for Dumfries because he is more knowledgeable about these matters than I. He said that the success of the experiments was not clear-cut enough—he did not go as far as the Minister, who seemed to deny any success—and quoted the Green Patch example. That is also quoted in the report as one of the examples of the sub-divided areas where some quantification has been made of success since the subdivision took place.

I have, as I am sure the Minister has, information about the latest position in Green Patch. The latest figures show that in the past year, which is not covered in the statistics in the report, there was an increase of 17 per cent. in the clip figure for 1982 over 1981. On this new sub-divided unit the comparison with the 1978–80 figure shows an increase in clip yield of 30 per cent., one of the most significantly successful operations in the islands.

It should be noted that this was a sub-division of a Falkland Islands Company farm. One of the features of the company is that it has never been willing to sub-divide most of the good farms. Green Patch was not regarded as one of the better farms, but sub-division has clearly proved itself to be good in the interests of this farm. There is no reason to suggest that it would not be good in the interests of others.

I am glad that the Minister announced today that the development agency that will be established in the islands will have the power to take over land and farms that come on the market. That at least is a healthy development since the statement was originally made by the Foreign Secretary.

Mr. Onslow

There has been no change.

Mr. Robertson

I welcome the signs of success. The Minister says that there has been no change, but at least this is a positive encouragement, suggesting that the Government are not as doctrinal as they recently appeared to be in the press and the House.

The power to buy land and then either to lease or sell it to new farmers is contingent on resources being available to the agency. It has to have the resources to make a meaningful contribution. The proposals in the Shackleton report are so radical that the resources must be made available. We are talking about something that is so crucial and pivotal to the future of the islands that we deserve an answer about the amount of resources that will be available to the agency to make sure that that function is carried out.

To those in this country who say perversely that we must protect the State from the aggrandisement of the landowners who may place too high a price on the land, I say let us export, along with an Attorney-General, a district valuer. That might be a good idea if the public purse has to be protected. We have an ideal system for protecting the community against those who wish to place over-high prices on land. The district valuer system is there. It would be the ideal protection.

My hon. Friend the Member for Hackney, Central dealt at length, rightly and properly, with the role of the Falkland Islands Company in the islands. The report highlights the role of the company. There is no doubt that the monopolistic role of the Falkland Islands Company is unlikely to be tolerated by islanders in future. It is too large. It is all-pervading. By necessity its role must be diminished.

Half of the road that the Minister is having constructed between Stanley and Darwin will pass through Falkland Islands Company property. If there was ever need of an argument for sub-dividing the farms along that route, it is that public funds will be used to drive a road between two communities—between Stanley and Darwin, which is largely owned by the Falkland Islands Company.

The House would do well to contrast the objections of the Falkland Islands Company to sub-division of the larger, better units on the islands with the private enterprise of two individuals connected with the company. Mr. Needham, who was the chief executive of Coalite, the parent company of the Falkland Islands Company, is proposing 50-acre plots at Fitzroy at land prices that are considerably above what the Shackleton report would consider reasonable and which the Minister would find difficult to swallow. Those are uneconomic plots and are inappropriate for the area. He is being countered by Mr. Camm, who was a consultant to Coalite, and who has now bought Douglas Station. He is marketing 50-acre plots at Douglas Station and asking that 1,000 people should come from Britain to take up those grotesquely uneconomic units. The chance for an opportunist killing has not been lost on some of the people who were previously associated with the islands.

It would be wrong if grant aid in the form that we are talking about were just to be a way of increasing the repatriated profits for the largest employer in the islands. Lest it should be suggested that I, an outsider, am suggesting something that is not believed by people on the islands, I shall quote Mr. Colin Smith, the owner of two farms on the islands, who said in a letter to Sir Rex Hunt: the Falkland Islands Company has now become a positive bar to change, and if the islands Council fears grasping this nettle, then the Islands will stagnate from now to Kingdom Come …The Council should ensure that the majority of subdivision takes place within the 43 per cent. of land owned by the Falkland Islands Company, if it fails to do this, it will have ensured the perpetuation, of the status quo and the stagnation and eventual depopulation and loss of the Falkland Islands". That was said by someone with a stake and background in the Falkland Islands.

Two weeks ago I stood at the graveside of a young constituent of mine, a paratrooper who was killed in action at Goose Green. Therefore, to some extent I can understand the immediate feelings of those who, like the hon. Member for Gosport (Mr. Viggers), say that the Falklands are and will always remain British.

Perhaps the people of this country will not accept a different outcome at the moment, but the Shackleton report contains a stark warning. In the light of that warning we had better realise that the British people will not find it acceptable, after the sacrifices of life, limb and money, to have expensive military might protecting a bunch of barren rocks with a dwindling population and a disappearing economic base 8,000 miles away. To allow that possibility to exist by avoiding the radical proposals in the report, as the Government are in danger of doing, would be to abandon the islands not by design or defeat but by default.

That outcome would be a disgrace and betrayal of those who gave their lives to provide a chance for those islanders. I urge the Government to read again the wise advice of Lord Shackleton's team and guarantee a firm future for those people, in whatever political framework they eventually live. The Government must recognise the challenge and the only possible remedies. That is the only way in which we can live up to the sacrifices of those who gave so much.

9.41 pm

Mr. Onslow

I agree with the hon. Member for Hamilton (Mr. Robertson) that this has been an interesting debate and that a great deal of ground has been covered fairly thoroughly. I hope that the House will allow me to deal with as many of the points that have been raised as possible. I am sorry that my hon. Friend for Perth and East Perthshire (Mr. Walker) and the hon. Member for Newham, South (Mr. Spearing) were not able to speak, because I know that they were anxious to contribute and sat throughout the proceedings.

It was time that we had a debate because there are many things to be said about the Shackleton report. I do not want there to be any ambiguity in the minds of the hon. Members for Hackney, Central (Mr. Davis) and Sheffield, Heeley (Mr. Hooley) about the statements which have been made about the source of aid funds. I can only repeat what my right hon. Friend the Foreign Secretary said on 8 December about the source of funds for the programme that we are discussing. The new aid will be financed mainly from additional funds. I believe that the hon. Member for Heeley missed the word "mainly". My right hon. Friend the Foreign Secretary was of course talking about the handling of this within the public expenditure survey.

My right hon. Friend the Minister for Overseas Development, in a written reply to the hon. Member for Heeley yesterday, said that Supply will be sought through the overseas aid Vote on the basis of the plans mentioned on 8 December. There is no inconsistency. No existing projects will suffer because of the funds that are being devoted to development on the islands.

I hope that the hon. Member for West Lothian (Mr. Dalyell) will forgive me if I do not dwell at length on his speech. The treaty of Tlatelolco is something about which I am sure he will put down many questions to me. I ask that he does not abuse the priority written question system by putting them down on a Thursday for answer on Monday. If he does, I may not be able to answer them as quickly as he thinks I should. I have no doubt that he will come back to me on any other points that he wants clarified.

I hope that hon. Members will understand that some of the points they have put to me are more properly for my right hon. Friend the Secretary of State for Defence. Military considerations inevitably take precedence in such matters as the location, precise type and timing of work on a new airfield and on other matters as well.

Mr. Bill Walker (Perth and East Perthshire)

A military airfield would be different from a civilian airfield. The military require a runway, and all the navigational and traffic control aids, but they do not need the facilities that are normally found at civilian airports. Therefore a military airfield will be just that—a military airfield.

Mr. Onslow

With his experience of such matters, I am sure that my hon. Friend will know that it is possible to provide an airfield that is suitable for both military and civil uses. We shall want to ensure that the civil uses are not overlooked. I hope that a team from the Civil Aviation Authority can be involved in the planning.

My hon. Friend the Member for Surbiton (Sir N. Fisher) asked me some questions about garrison accommodation, but they are principally a matter for the Secretary of State for Defence. As I have said, we cannot make permanent arrangements until decisions about the airfield site are finalised. However, I hope that it will help to know that we are making interim arrangements to improve accommodation for the garrison on the islands. Portakabins are being set up round the settlements outside Port Stanley and I understand that a Coastel is being positioned in Stanley harbour which will relieve much of the pressure on civilian accommodation in the town.

I have never heard of 25 ships having to wait in the harbour to unload. I understand that at one point there were 15 ships in the queue, but only one vessel has faced a prolonged delay in offloading. That is a great tribute to the efficiency of the harbour masters and others involved in running the port.

Sir Bernard Braine

One of them is a good man. His mother is a constituent of mine.

Mr. Onslow

I am delighted to hear that.

I agree about the importance of the new jetty. I hope that the value of the decision that I have announced has not been underestimated. We are allocating about £7 million to the construction of the jetty, which is more than seems to have been thought by some.

BBC broadcasts have been mentioned. As my right hon. Friend the Prime Minister told the hon. Member for Liverpool, West Derby (Mr. Ogden) in a written answer on 9 December, the present temporary pattern of three "Calling the Falklands" broadcasts per week will be replaced next year by a permanent pattern of two broadcasts a week. Before the crisis, there was only one such broadcast a week. The Falkland Islanders have been consulted about the reduction to two broadcasts per week and are broadly content with that.

I was sorry not to hear the speech made by my hon. Friend the Member for Essex, South-East, although I have heard an account of it. I particularly want to take up his point about immigration from St. Helena as a possible solution to the labour problem on the Falkland Islands. Of course, one problem is the lack of accommodation. Therefore, it is difficult, if not impossible, to think of bringing in much labour. As he probably knows, immigration into the Falkland Islands is essentially a matter for the Falkland Islands Government, which must be allowed to take decisions on that. However, if people on St. Helena have the necessary skills and apply to go to the Falkland Islands, I am sure that the Falkland Islands Government will consider the applications carefully. The increasing employment opportunities on Ascension Island have, however, done something to take up the labour surplus on St. Helena.

My hon. Friend the Member for Gosport (Mr. Viggers) made several interesting points. He referred to 10,000 tourists. Of course, the troops and others on the islands may not recognise that description. If my hon. Friend had said 10,000 potential purchasers of souvenirs, they would probably recognise themselves at once. When I was there, I told those who modestly supply the islands' souvenir trade that they should understand that they had suddenly got a cash flow injection of another £1 million per year into their businesses. Any military tourist there is likely to spend at least £100 on some things for his wife or girl friend. That represents an opportunity to which there must be some response, other than bringing in pottery from Stoke-on-Trent and selling it in the Upland Goose. Someone must go for that.

My hon. Friend referred to the Government air service. We now have one Beaver plane equipped with floats in Port Stanley. It was bought in Canada, dismantled and shipped out. It should be reassembled shortly and be in service before the end of next month. Two Brittan Norman Islanders will be shipped from the United Kingdom next month. They will be reassembled on the Falkland Islands by a specialist team from the manufacturer. I expect them to be in service in March. My hon. Friend the Member for Gosport may wonder why we break them down and ship them in crates. However, it does not seem to make much sense to try to do some sort of Biggles operation to fly them in clandestinely. It is far better to ensure that they arrive there safely so that they can be used. The Bell Huey helicopter caused me some work during the past few weeks. It was repainted in Falkland Islands Government air service colours and great expectations were aroused when it was flown. We then had to find a way to insure the passengers since I could not agree to uninsured civilians being flown in the helicopter.

We solved that problem. We then had to find a helicopter pilot from the Army Air Corps who was type certificated and we had to ensure that the aircraft was airworthy. The helicopter mechanic, a Falkland Islander employed in Britain by the helicopter company, was sent out to the islands. He found that the helicopter had suffered a heavy landing and it was therefore impossible to certify it as safe. It will be shipped back to Britain for repair, but we are considering looking for another helicopter to be used for running a regular service. The costs and consequences of such an operation must, however, be examined.

The major issue of land reform was raised by many hon. Members. It was refreshing to hear a farmer talk about farming. My hon. Friend the Member for Dumfries (Sir H. Monro) obviously knew what he was talking about. He has been to the islands and he carried more conviction simply because he had more first-hand knowledge than is available from either the Shackleton report or from the speeches that we heard today. [Interruption.] All farmers are gentlemen. The hon. Member for South Ayrshire (Mr. Foulkes) would do well to remember that.

It is worth examining why Lord Shackleton keeps returning to the land reform recommendation in his report. Page 8, paragraph 2.4.1.(a), of the report states: the continuing high drain on resources from the Islands in the form of remittance undistributed profits and dividends must be stemmed. The report's radical solution to the problem is to stem the flow of funds from the Islands and to encourage reinvestment of profits. But if the ill is as described, the remedy must be appropriate. Paragraph 3.3.5. of the report on page 32 states that the Falkland Islands company has a somewhat better recent investment record than the other five companies examined and has made good the depreciation of its assets by reinvestment. On that basis, there seems no good reason for singling out the Falkland Islands Company for land nationalisation, as Opposition Members appear to wish. If the remittance of profits is the ill that we must remedy, why can it not be cured by fiscal means? Fiscal means are in many ways appropriate. The Falkland Islands Government have powers that entitle them to use fiscal means if they wish.

As to what is supposed to be wrong with the farming economy of the islands despite what the hon. Member for Hamilton said, it has still not been established that small farms are likely to be more profitable. They are certainly not likely to employ more people. A farm that employs a man, his wife and son is not necessarily that much better an enterprise than a farm that employs a farmer and two wage-earning staff. Full-time employment of the farmer's wife does not necessarily represent an increase in the collective standard of living, but that is a matter of opinion.

The hon. Member for Bolton, East (Mr. Young) raised the issue of giving the islanders a stake in the islands. I hope that the hon. Member for Hamilton will not get this matter out of proportion. Much of the evidence that Lord Shackleton quoted was garnered before 1976. The hon. Member for Hamilton will find, if he goes to the islands, that there are many other ways of helping islanders to obtain stake in the islands. If he goes to West Falkland, he will find that an individual who is not an estate proprietor cannot own property there. If he wishes to retire there, he cannot buy a house. There are no smallholdings for sale anywhere on the islands at the moment.

The Falkland Islands Company's idea of bringing forward such properties is a sensible response to a perceived need. There are many different ways of obtaining a stake other than through the ownership of a small farm. The problem must be seen in the round.

We have heard quotations from Mr. Colin Smith and Mr. Bill Luxton, whom I met and to whom I took a great liking. In the article by Gavin Young in The Observer, Mr. Smith is quoted as saying: This farm is too big for us. I'd like 8,000 sheep here on 25,000 acres. If I am right and he owns the property, what is there to stop him taking the initiative to break up his farm? The Government need not move in. If what Mr. Smith says is true, why cannot he find some means of putting small units on the market from the farms that he controls?

Apart from the fact that there is little evidence of the proper state of current demands, what is the future of the islanders? The hon. Member for Hamilton made much play of Mr. Gavin Young's article. It is true that Mr. Young stayed with Sir Rex Hunt in Port Stanley and, therefore, one would think that he was in a good position to report accurately upon what happens. But, unfortunately, the article from which the hon. Gentleman and others quoted was written before the meeting of the Legislative Council on 16 December that endorsed the proposed gradual approach to land transfer that is embodied in the Government's decisions. [Interruption] The hon. Member for Hamilton cannot quibble about that. The Falkland Islands Council did not endorse the wholesale purchase and sub-division of land. It decided that the gradual approach that we proposed, but with which the hon. Gentleman finds fault, was the path down which it wished to go. That is the latest, the best and the most accurate test of island opinion that we can quote. The evidence is on the side of the Government and not on the side of the hon. Gentleman.

Mr. Clinton Davis

Are we to conclude, therefore, that the Minister is satisfied with the operations of the Falkland Islands Company in almost every material respect? How does he justify that in the light of the criticisms that I was able to adduce in my opening speech, based on firm evidence?

Mr. Onslow

I do not believe that they were based on firm evidence and I was not impresed by what the hon. Gentleman said. That is shown by the fact that I have not changed my mind. I am sorry, but that is how debates go.

It is worth quoting to the House what Lord Shackleton says about air communications in paragraph 2.7.1 of the report: The establishment of regular civil air communication with the Islands is an absolute priority. Without it, little or no development would take place, the economy would decline further, and the sense of isolation would probably be unacceptable to the majority of Falkland Islanders". The Falkland Islanders must express their opinion about that and they have not come to the conclusion that Lord Shackleton tries to put into their minds. They are not unused to isolation. Their fragile way of life has an isolated quality about it. They will not be put off developing their islands simply because there is not an established air service to the South American mainland. We should not be put off helping them to develop their economy because there is no such link. If we show resolution and fairness, such links will emerge in the natural course of events.

Hon. Members who whinge away are doing their utmost to make it impossible for the Falkland Islanders to succeed. Had this been a football field, many own goals would have been scored by some of the bitter and twisted speeches from the Opposition. The Falkland Islanders will not recognise that as a spirit embodied in themselves or represented by the Service men in their midst, who show what we feel about their prospects. [Interruption.] Although I sometimes fall out with the hon. Member for West Derby, he need not interrupt me. He made many points, including the important point that we should let the Falkland Islanders set the pace. We shall not run their lives for them. We wish to give them the opportunity to run their lives themselves, to give them security and to give them the opportunity to develop greater confidence and greater independence in their own time and way. The one matter that represents the collective will of the House is that we are not in the business of telling the Falkland Islanders what they should do. We are not running their country for them. We are standing guard to enable them to live their lives in their own way.

Mr. Tristan Garel-Jones (Watford)

I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.