HL Deb 08 December 1982 vol 437 cc190-8

3.46 p.m.

Baroness Young

My Lords, with the leave of the House, I shall repeat a Statement being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:

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

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

"The Government agree with the broad conclusions of Lord Shackleton's report and are ready to support action by the Falkland Islands Government in the following major areas covered by his recommendations: A Falkland Islands Development Agency (FIDA) should be established. This would be provided with funds to buy land on the open market, and to divide it into smaller holdings. It would also have powers to make loans and grants towards the cost of a number of small-scale development projects; the islands' agricultural research centre, the Grasslands Trials Unit, should be expanded; there should be a feasibility study on an improved harbour complex, including a new deep-water jetty; the Stanley-Darwin road should be completed and the existing network of tracks should be improved; a pilot scheme for salmon-ranching and a survey of shellfish resources should be established, hotel and guest-house facilities upgraded and cottage industry skills developed.

"Although they were not specifically covered in Lord Shackleton's report, we believe that urgent action should also be taken to improve the water supply and sewage system in Port Stanley, to study the requirements for future electricity generation and distribution, and the telephone system in the islands.

"The following proposals made by Lord Shackleton, in our view, require further study: exploratory offshore fishing and the establishment of a 200-mile fisheries limit; the implications of such a limit, not least its policing, and the degree of commercial interest in fishing, need to be carefully assessed; and the expansion of tourism—this will depend to a large extent on the establishment of commercial air links.

"We are not convinced by Lord Shackleton's proposal for the wholesale transfer and sub-division of absentee-owned farms. We believe this is inappropriate and consider a gradual approach to land redistribution under the auspices of the Falkland Islands Development Agency more in keeping with the capacity of the islands' existing agricultural population and more consistent with realistic immigration prospects. We are also not convinced of the need for a major expansion of the road network and are looking at more cost-effective ways of improving transport within the islands, in particular by improving the existing network of roads and tracks.

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

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

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

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

My Lords, that concludes the Statement.

3.51 p.m.

Lord Cledwyn of Penrhos

My Lords, we are grateful to the noble Baroness for repeating the Statement, and we associate ourselves with the tribute that she has paid to my noble friend Lord Shackleton and his colleagues for their report. My noble friend has placed his great knowledge and experience of this part of the world at the service of Parliament and the country, and we are all deeply indebted to him.

We welcome the acceptance by the Government of a number of the recommendations in the report, especially that relating to the setting up of the Falkland Islands Development Agency. The report states that, as a planning objective, a Falklands community of 1,800 or less, defended by a garrison of 3,000 or more, surviving economically principally because of income from stamps, is unacceptable". The report went on to recommend, inter alia, long-term development. Would not the noble Baroness agree that the future of the islands depends upon their basic wealth in agriculture, and in particular upon wool? Therefore, is it not important to look very carefully at tourism? I thought that the report might have been slightly too dismissive of the encouragement of tourism, though to a very large extent it depends on the improvement of communications.

We also warmly welcome the plans to improve the services—electricity, water supplies, and so on—which are so essential to the islands. Many of the services were of course damaged or completely destroyed in the recent conflict.

The report recommends the purchase of all farms owned by absentee landlords, followed by sale to the development agency, and subsequently by sale to the Falkland islanders, or suitable outsiders. Would not the noble Baroness agree that that is both sensible and necessary if the islanders are to feel that they have a stake in the future of the islands? As has just been stated, the Government have gone some way towards implementing that, but how do the Government intend to deal with the crucial recommendation in the report relating to the transfer of ownership of farms belonging to absentee landlords, so as to stem the flow of profits from the island, which for the islanders themselves is one of the most discouraging factors? Again, what action do the Government propose to take to deal with the dominant position of the Falklands Islands Company? The company has recently twice been asset stripped, and it is a relatively minor subsidiary of a chemical conglomerate. I feel that this is a matter at which the Government ought to look very carefully.

I should like to say in parenthesis that I understand that the Highlands and Islands Development Board was particularly helpful to my noble friend and his colleagues in the preparation of the report, and I think that the House will be grateful to the board for that assistance.

Can the noble Baroness say a little more about the airfield, which is so very vital to the islands? What is the position regarding rebuilding the airfield, bearing in mind that it is now used for military purposes? Can she say what is the latest estimated cost of bringing the airfield up to a proper standard? Finally, would not the noble Baroness also agree that a satisfactory settlement in the Falklands is absolutely essential in relation to the maintenance of peace in the whole area of the Antarctic, as indeed the report makes quite clear?

Viscount Thurso

My Lords, we on these Benches wish to be associated with the thanks expressed to the noble Baroness for repeating the Statement, and in particular we wish to express our thanks to the noble Lord, Lord Shackleton, for the magnificent work that he has done in producing a series of reports, culminating in the report that we are now discussing, about how the Falkland Islands could, and should, be developed. It is only sad that this kind of development was not undertaken long ago, in which case it might well have been that the conflict that has caused so much sorrow in this country and in the South Atlantic would not have taken place.

Clearly, it is important to ensure the economic future of the islands through a development programme, and the pattern to be followed of a Falklands Islands Development Agency somewhat similar to the Highlands and Islands Development Board, is obviously a good and reliable one. I fear that, in accepting both the agency and the development, the Falkland islanders will have to recognise that their way of life is bound to change, and I am sure that Her Majesty's Government will be explaining to them that, if they wish to keep their freedom, they may well have to change parts of their way of life.

We accept the main conclusions regarding the development agency, the research centre expansion, and the feasibility study of the harbour complex. We tend to agree with the noble Lord, Lord Shackleton, that the development of roads and communications is of a higher importance than the Government appear to think, and I ask the noble Baroness whether the Government would not reconsider this aspect, and perhaps consider even the setting up of sea links as being the quickest way of establishing communications between remote parts of separate islands.

I am sorry to see that the development of fisheries boils down to a mere pilot scheme for salmon ranching. I think that this is unsatisfactory, when so often we have heard that in terms of undeveloped fisheries the Falkland Islands are situated in one of the richest seas on the face of the entire globe. I feel that more should be done in this regard, and I should like to know whether the Government would reconsider the decision that they appear to have taken, and thus undertake more action to try to encourage commercial fisheries in the Falklands.

Finally, I should like to say that there really is no time for a gradual approach to land distribution. I would remind the noble Baroness that the Highlands and Islands Development Board itself has compulsory purchase powers, and it would be as well if such powers were given to the Falkland Islands Development Agency. I say that because in the Highlands of Scotland the Highlands and Islands Development Board might well compulsorily purchase land owned and occupied by somebody, whereas in regard to the Falkland Islands all that has been proposed in this connection is that land owned by absentee landlords might suitably be resettled. I believe that around Scotland there is plenty of evidence of the value of land resettlement that has been carried out from generation to generation. So I would urge upon her Majesty's Government that, as the noble Lord, Lord Cledwyn of Penrhos, has said, they should look very closely at the position of the Falkland Islands Company in all of this, and should at least seek its co-operation in land resettlement—and if that is not forthcoming, they should force its cooperation in land resettlement.

Baroness Young

My Lords, I should like to thank both the noble Lord, Lord Cledwyn, and the noble Viscount, Lord Thurso, for their response to this Statement. I should also like to add my own thanks to those expressed to the noble Lord, Lord Shackleton, for his report, which the Government have found most valuable.

The noble Lord, Lord Cledwyn, asked a number of questions, and I shall do my best to answer them. He asked particularly about the airfield. I think I should say that, as I indicated in the Statement, the Government recognise the importance of the matter, but the outcome must depend on decisions still to be taken by my right honourable friend the Secretary of State for Defence. Not only the military needs of the garrison but also the requirements of the islanders themselves and the longer-term economic development of the islands will be taken fully into account when these decisions are made. The noble Lord, Lord Cledwyn, also asked me about tourism, but I think he himself acknowledged that this will depend very much on improved services.

Both noble Lords referred to agriculture and long-term development. On agriculture, perhaps I may say that apart from land purchase, about £7 million might go into agriculture over the period. Rather more than half would finance a much expanded research programme; the balance would go into direct agricultural support through a system of grants and subsidies.

On the question of the sub-division of the large farms, the Government believe that the case for a subdivision of existing large farms is not yet proven. There is, for example, no firm evidence that sub-division would either promote development or create employment. Island opinion, which has been consulted on this point—and may I add that it was recently consulted by my honourable friend in another place, Mr. Cranley Onslow, when he visited the islands as recently as last October—is also unpersuaded of the advantages of wholesale sub-division. We have therefore opted for a gradual approach to land redistribution. As the noble Lord, Lord Shackleton, records in his report, a start has been made with the purchase and sub-division of the farms at Green Patch and Roy Cove.

The noble Viscount. Lord Thurso, also asked me about roads on the island, and the amount of money to be spent on them. The Shackleton Report envisaged work on an improved road network linking either the main settlements or all the larger settlements. There is, we think, little prospect of enough traffic to justify the investment, and indeed the maintenance costs of the roads would be a very heavy burden on the Falkland Islands Government. Therefore, in our view the priorities are to restore Port Stanley's road system, which is a part of the rehabilitation work now in hand, and then to complete the road already under construction between Port Stanley and Darwin. There will also be scope for improving some of the worst stretches of the network of tracks, and we believe that about £7½ million might be needed for this.

On the question of fishing, discussions are in progress with the European Investment Bank about funding the next stage of work on the prospects for salmon ranching. Consultants will probably have to be appointed to survey the shellfish possibilities, but we believe that about £1.3 million will be earmarked from the Government's contribution for these two proposals. I am sure we all welcomed the concluding remarks of the noble Lord, Lord Cledwyn, when he said that he believed that a satisfactory outcome to the issue of the Falkland Islands' economy was essential for their future prosperity and success, and I would very much endorse what he said on this point.

Lord Kennet

My Lords, we should like to join in the thanks which have come from all parts of the Opposition to the noble Lord, Lord Shackleton, for the report which has been summed-up by the Government today. I have three questions only. First of all, could the Leader of the House be a little more specific about relations between the new Falkland Islands Development Agency and the Falkland Islands Company? After all, as the noble Lord, Lord Cledwyn, has told us, the Falkland Islands Company is a minor part of a large conglomerate which has twice been asset-stripped and is not even quoted on the market. It is, therefore, I take it, quite easy for the Falkland Islands Company not to respond to overtures to purchase land on the open market—and "on the open market" is the phrase used in the Government's Statement. It is in fact easy for such a minor part of a conglomerate to disappear in the undergrowth.

Will the Falkand Islands Development Agency have compulsory purchase powers? If not, what role do the Government see for the Falkland Islands Company in the future? Subject to that, we welcome the creation of the Falkland Islands Development Agency. It seems that a public sector solution is in place on this occasion.

My other two questions concern, once more, the airport. I think we all know that the shape of the future of the Falkland Islands is going to depend on whether or not that airport is extended. What advantage do the Government see in delaying a decision yet further? What would be against their saying either "Yes" or "No" at this stage? Lastly, on what one might call the Antarctic dimension, the Statement makes no mention whatever of the Falkland Islands dependencies. What is intended for them? Is there any advantage in delaying a decision on whether or not one will be seeking a solution in some way in accordance with or by reference to the Antarctic Treaty, using the dependencies in a kind of mediating position, both legally and geographically, between Antarctica and the Falkland Islands themselves? Is there any hope that the Government may yet see the light about the United Nations Convention on the Law of the Sea and the potentially very fruitful applications of that convention to the waters of the South Atlantic?

Baroness Young

My Lords, on the first of the three questions that the noble Lord, Lord Kennet, has asked me, so far as the Falkland Islands Company is concerned we believe that it can play a valuable role in the agriculture and trade of the islands and in their economic diversification and development. I believe it has been acknowledged that the Falkland Islands Company has indeed a somewhat better investment record in the recent past than other companies in the islands. In 1980 they sold the farm at Green Patch to the Government for the purpose of sub-division into six smaller units, and have agreed to give up their basic banking services to the Standard Chartered Bank.

On the question of the Falkland Islands Development Agency itself, we think that the agency's initial running costs will be about £50,000 a year, and it should have a budget for small projects of several hundred thousand pounds a year. It would be the agency carrying out major projects which would be funded individually under the British aid programme.

To turn to the airport, I think it would be difficult for me to go any further than I did in my original answer to the question, because in fact the reason why there has been no decision about the outcome is that we are still awaiting a decision from my right honourable friend the Secretary of State for Defence. There are, as I understand it, various alternatives still being considered, and at this stage I really cannot go further than what I have already said. But, as I have indicated, we of course recognise the importance of the matter. Regarding the dependencies, I do not think that it would be right for me at this stage to go into the future of that matter, because at the moment we are particularly concerned with the report on the Falkland Islands themselves.

Lord Stewart of Fulham

My Lords, the noble Baroness has said that the Government do not accept the idea of the wholesale redistribution of land. She used that expression. I think I am right in saying that that is not what the report recommended; but it did recommend further steps in redistribution beyond what is apparently in the Government's mind at the present time. I hope therefore that the Government will look at that point again. Then, are we to have an opportunity to debate the report itself and cognate matters connected with the Falklands? I speak to the noble Baroness now in her capacity as Leader of the House.

Baroness Young

My Lords, the answer to the second question that the noble Lord, Lord Stewart, put to me is that of course this would be a matter for the usual channels. However, I am sure that they will have noted the point that has been made, and I shall certainly pass it on.

On the noble Lord's first point, about the redistribution of the existing large farms, what I hope I indicated to the House is that what we have done is to opt for a gradual approach to redistribution; and, as this becomes possible, so we shall be able to redistribute the farms. It appears from the very extensive round of consultations which have taken place (and particularly those to which I have already referred which took place only in October) that this is not something which we are clear that the islanders themselves would particularly welcome. For that reason and for the reason that we think that the case has not yet been proven, we would rather proceed in this gradual way.

Lord Hunt

My Lords, arising out of the reference in the Statement to the establishment of a military garrison, linked with a speech made by Mr. John Nott at Port Stanley while he was on a visit to the Falkland Islands, in which he made a reference to the potentialities of the islands as a training area—from which I take him to mean that this would be a training area in which live ammunition of all kinds would be used—could the House be assured that such a development would not in any way be prejudicial to the preservation of the way of life of the islanders and that, by the same token, it would not be prejudicial to the development of tourism?

Baroness Young

My Lords, I should like to reiterate that anything I have said in trying to answer questions this afternoon and in the Statement has been designed to indicate that it is the Government's wish to preserve the way of life of the islanders as far as possible and that we believe that the mainstay of this will continue to be sheep ranching, but that the programme will also allow new sectors to be developed, including the possibility at some future time of tourism. Any remarks that my right honourable friend the Secretary of State may have made about the islands and defence should not in any way be taken as running contrary to the commitment that we have to do our best to make the islands economically viable in their traditional way and in other ways that may be developed.

Viscount Montgomery of Alamein

My Lords, in view of the importance of communications which is so cogently stressed in the admirable report produced by the noble Lord, Lord Shackleton, can my noble friend say whether conversations with Argentina will play a part in this and whether any progress at all has been made in trying to re-establish relations with Argentina?—without which it is difficult to envisage future long-term peace in that part of the world.

Baroness Young

My Lords, at present we are not conducting negotiations with Argentina for reasons of which the noble Viscount, Lord Montgomery, will be aware; but of course we hope that our relations with other countries of South America will continue to improve and that they will come to understand our position over the Falkland Islands.

Lord Monson

My Lords, can the noble Baroness indicate whether there is any prospect of establishing a commercial air link between the Falklands and Punta Arenas in Chile, bearing in mind that Chile has continually taken Britain's side in this dispute?

Baroness Young

My Lords, I think it would be right for me to write to the noble Lord on that point; but, as I understand it, it would be quite difficult at the moment when the airport is in the condition that it is.