§ 3.32 p.m.
§ The LORD PRIVY SEAL (Lord Peart)My Lords, with the leave of the House, I will repeat a Statement being made in another place by my right honourable friend the Prime Minister, about the visit of the Chancellor of the Federal Republic of Germany from 23rd to 24th January.
"This was one of the series of regular six-monthly visits between the British and German Heads of Goverment.
"Chancellor Schmidt was accompanied by Herr Genscher, Vice-Chancellor and Federal Minister of Foreign Affairs; Dr. Apel, Federal Minister of Finance; Dr. Friderichs, Federal Minister of the Economy; and Herr Leber, Federal Minister of Defence. On our side the Chancellors 345 of the Exchequer, the Foreign and Commonwealth Secretary, the Secretary of State for Energy and the Secretary of State for Defence took part. We began with a general discussion between all Ministers followed by a series of bilateral talks and then we came together again for a final session. This pattern worked well, and the Federal Chancellor and I agreed to repeat it at our next meeting.
"The talks covered a wide range of international and Anglo/German bilateral matters. I expressed to the Chancellor the appreciation of Her Majesty's Government for the support which the Federal Government has given us in recent weeks in connection with the IMF loan and the Safety Net; both of which have contributed greatly to more stable conditions in the international money markets.
"Much of our talks was concerned with the present world recession and how we should approach the series of international meetings which are in prospect over the next few months. We were agreed that a properly prepared meeting of leading industrialised countries would be helpful in co-ordinating our policies for bringing the world out of recession.
"Britain's prospects for recovery in 1977 are based on growing exports and I emphasised the importance we attach to continuing expansion in the economies of the world, including those of the United States, the Federal Republic of Germany and Japan, as a means of generating greater expansion and more employment in the rest of the world.
"We reviewed the present position of the negotiations between the industrialised countries and the developing countries in the C.I.E.C. [Conference on International Economic Co-operation].
"We also discussed our relations with the Soviet Union and the preparations for the talks that will take place in Belgrade this summer to follow up the agreements reached at Helsinki.
"On defence matters, we welcomed the declared intention of President Carter and of the Soviet Union to seek a new agreement on Strategic Arms Limitation and agreed that the Vienna 346 negotiations on reducing conventional arms should be given a new impetus.
"We did not attempt to reach a final agreement on the question of offsetting the cost of stationing our troops in Germany on which our two Governments hold different positions. The Federal Chancellor pointed out that similar arrangements with the United States had already been brought to an end. Our discussions will continue and we are both confident that we shall with time reach a conclusion on this matter.
"Our joint interests with the Federal Republic of Germany cover many areas—in the European Community, in NATO and more recently in the Security Council of the United Nations. I am glad to report that in all these fields our relations are close and in good repair."
My Lords, that concludes the Statement.
§ 3.36 p.m.
§ Lord CARR of HADLEYMy Lords, of course from this side we welcome regular and close exchanges between the British Prime Minister and the Chancellor of the Federal Republic, and we hope that this is a series of meetings which will continue in a constructive manner. But I should tell the noble Lord that there are two things on the economic side which worry us. First, the need to tackle inflation worldwide is very great—and not just in this country. Therefore we believe that we should do ourselves a poor service in the long run if we were to be successful in persuading the Federal Republic and other countries to take action which might set in train a new burst of inflation worldwide. So I cannot help saying to the noble Lord: are we wise to be doing this?
Secondly, it seems to us that we as a country are in no position to tell countries like Western Germany, or Japan, or the United States, how they should manage their economic affairs when we have been so patently unable to manage our own. Again we would say to the Government: are we wise to be trying to lecture other countries much more successful than we are on how they should manage their economic affairs?
With regard to the defence aspect, we note the closing sentence of the Prime 347 Minister's Statement in which he says that he is,
glad to report that in all these fields our relations are close and in good repair.But I am bound to say to the noble Lord that it seemed that in the particular reference to the vital subject of offsetting the cost of our troops stationed in Germany, they were very far from close agreement. I wonder whether the noble Lord can say something more to us about that and indicate when we might hope for a conclusion which will be satisfactory to both sides.
§ Lord GLADWYNMy Lords, we on these Benches can only welcome the Statement which has been read out by the Leader of the House. We welcome the obviously satisfactory nature of the conversations which have taken place. Whether this is due in any way to the fact that we hear that Chancellor Schmidt gets on better with the present Prime Minister than with his predecessor, we do not know. If that is the case, then it is very welcome to us also.
I have only two questions to ask. First, I note that in the final paragraph of the Statement it says:
Our joint interests with the Federal Republic of Germany cover many areas "—notably in the European Community, which I am sure is true. Therefore, can we take it that there was some discussion of the best way to handle Community problems in the Community, now that Britain has the Presidency of the Community? Was that matter at all referred to in conversations with the Chancellor? And if not, would it not have been a good thing if it had been?With regard to the second question I have to ask, I note also that there was some discussion on defence matters which was, however, confined, if I understand it rightly, to the,
declared intention of President Carter and of the Soviet Union to seek a new agreement on Strategic Arms Limitation ",and so on. That is all very well and very good, but was there perhaps any discussion of the possibility of some kind of reorganisation of European defence within the framework of the Atlantic Alliance? That is a question which in any case seems to us on these Benches to be becoming 348 increasingly urgent, and I should have thought that it is something to which it might be supposed that the Chancellor of the German Republic might lend a sympathetic ear.
§ Lord PEARTMy Lords, I hope noble Lords will appreciate that I was not in the talks and that I have to rely, naturally, on what has been conveyed to me in documents. All I can say first to the noble Lord, Lord Carr, on the question of inflation, is that of course I am not saying we should lecture the German Government; but I think we have made commendable progress here. I referred to this when we had an economic debate, and no doubt we can develop this theme further tomorrow; but we need not apologise on this. There was no question of lecturing the Germans: it was a friendly discussion between two Heads of Government. I think we should regard it as such; and we welcomed it. On the question of defence and offsetting, yes, there were discussions on that. There was no agreement, but I understand this matter will be pursued further.
In reply to the noble Lord speaking for the Liberal Party, as to how best we should handle matters in the Community, undoubtedly there were informal discussions on that. I believe it is quite right that we should, wherever possible, with our Community partners, play our part and be Communautaire. I learned that lesson, even though I used to be a critic. I was once a critic of the Community, but we are in and I believe that we must make it work. Some people forget this. Again, mention was made of defence and as to whether or not some reorganisation of defence in Europe can be speeded up. I think we must work through NATO. I think that that is the right channel.
§ Lord DOUGLASS of CLEVELANDMy Lords, is my noble friend aware that, on the economic side, Herr Vetter, the Secretary of the German TUC, has declared that unemployment will not be cured by investment and has suggested that there ought to be a work-sharing system introduced into Germany? This, of course, has been resisted by the unions in Germany, who are calling for longer holiday periods and things of that character. But if we have arrived at a point wherein the economy of Germany, which has been so satisfactory in the past, now 349 visualises that investment will not cure unemployment, are we giving any consideration to this aspect of the economic problem facing not only this country but every country in the world, including Germany and Japan?
§ Lord PEARTMy Lords, I am afraid I could not comment in detail about the position in Germany. I think my noble friend has raised an interesting point, but I think it is a matter which he could well pursue in our debate tomorrow. It is a very important point.
§ Lord WIGGMy Lords, would the Minister not agree that the offset costs to this country are not less than £1,000 million a year and that the German contribution, under the agreement which expired last March, was only £20 million; and could he tell us whether this enormous gap between the outlay of £1,000 million and the German contribution of £20 million remains as large as ever, or has it been narrowed?
§ Lord PEARTMy Lords, I cannot say specifically, but it was discussed, and I did reply to the noble Lord opposite on this matter. I am sorry that I cannot give details of the discussion; but I am prepared to follow it up.
§ Lord BALOGHMy Lords, would my noble friend agree that it is not for noble Lords opposite to blame us for the cost of the Rhine Army, because that matter was not included in the Bonn Agreement giving back to Germany its sovereignty?
§ Lord PEARTMy Lords, I do not want to pursue this matter. I think I made my position clear. There has been a discussion about this, and at this stage I will leave it at that.