Sitting of 12 January 1977

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  TRANSPORT

    Motorways (Fog Accidents)
    Mr. Gwilym Robertsasked the Secretary of State for Transport what study he is making of motorway accidents in fog; and what steps he is taking to reduce the number and magnitude of such accidents.
    The Under-Secretary of State for Transport (Mr. John Horam): We are examining the problem of motorway accidents in fog to see whether any changes are needed in the regulations, advice and technical assistance to help drivers to cope with the difficult conditions and to reduce the risk of accidents.
    Mr. Roberts: Does not my hon. Friend agree that, since the introduction of lighting on the Hertfordshire, Bedfordshire and Buckinghamshire section of the M1, there has been a dramatic reduction in motorway accidents in that area? What plans does he have to light sections of other motorways which are particularly vulnerable to accidents in fog?
    Mr. Horam: There is a national plan to light particularly difficult sections of motorways, and this is operated with the co-operation of local authorities. There is also a national plan to provide more warning signs of difficult conditions indicating the need for slower speeds and so on. Taken together, I hope that these measures will help to improve the situation.
    Mr. Madel: Would it not reduce the risk of accidents if lorries used only the slow lane on motorways in foggy condi-
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    tions? Will the Minister institute a study of the operation of the hazard warning lights which are often flashing on motorways for no good reason?
    Mr. Horam: Confining lorries to the slow lane in fog would present other drivers with difficulties, because if they were forced into the outer lanes they might have to cross one or two lanes of heavy lorries to leave the motorway. We have looked at this suggestion in the past and we shall look at it again if we feel that it can make a serious contribution to the problem. I shall certainly look into what the hon. Gentleman has said about warning lights flashing unnecessarily.
    Mr. Fitch: Does my hon. Friend agree that there are fewer accidents per vehicle mile on motorways than on any other roads?
    Mr. Horam: Yes, my hon. Friend is right. The risk of death or serious injury on motorways is one-third of what it is on all other roads. Motorways are our safest roads.

    Rural Bus Services
    Mr. Rees-Daviesasked the Secretary of State for Transport what recent representations he has received for improving rural bus services.
    Mr. Horam: We have received many such representations.
    Mr. Rees-Davies: The hon. Gentleman may have received many such representations, but what proposals do the Government have to relax the licensing of buses in selected rural areas or at least to permit the licensing of private operators to give additional services? Do the Government recognise that it is now most urgent to have no further experiments but to prevent further decline in rural bus services? Why have they done precisely nothing about this problem in the past three years?
    Mr. Horam: On the contrary, we have done a great deal and I hope that we shall begin to see the signs of our action from Easter, when the first areas of experiments in unconventional rural transport begin. That is the sensible way forward. Trying to make a general relaxation in road traffic licensing laws can result in the baby being thrown out

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    with the bathwater, as has happened in many other countries, and the damage to existing services can be more than the gains made with unconventional means of transport.
    Mr. George Rodgers: Will my hon. Friend comment on the formidable cost of getting children to school in rural areas? Is he aware that the cost of getting two or more children two or three miles to school can have a severe impact on households with average or low incomes?
    Mr. Horam: I recognise my hon. Friend's important point, but this is a matter for the Secretary of State for Education and Science and local authorities in the first instance and not for my Department.
    Sir T. Kitson: Is the hon. Gentleman aware that the proposed cuts in rural transport in the North Riding are likely to be very severe in the next few months? Could he encourage local authorities to stay these cuts until the study group to cover the North Riding area and North Devon is set up at Easter?
    Mr. Horam: There are a number of experiments taking place in the hon. Gentleman's area. He will know that the Richmond District Council is conducting many interesting experiments, and it will be interesting to see what happens when our experiments are under way, some of which will be partly in conjunction with experiments being run by the Richmond Council. I look forward to them with considerable interest.
    Mr. Lipton: Will my hon. Friend bear in mind that since the Beeching Report 3,539 railway stations have been closed and that this is having a disastrous effect on the mobility of people in rural areas and making the provision of adequate rural bus services even more important?
    Mr. Horam: I take my hon. Friend's point, but since the Question relates specifically to bus services I shall leave my right hon. Friend the Secretary of State to deal with rail services.
    Mr. Adley: Does the Minister agree that the main hindrance to experiments in the running of new bus services in rural areas is the activities of the traffic commissioners, whose duties were
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    designed to meet the needs of the 1920s and 1930s? Will he consider some of the Conservative transport proposals of 1973? Will he consider whether they can be introduced to remove some of the artificial restrictions on transport experiments, especially in respect of rural bus services?
    Mr. Horam: I think that the hon. Gentleman is on to a fair point. The traffic commissioners have lasted for quite a long time without any change. We should consider whether they are suitable for today's conditions, bearing in mind that there has been a decline in rural transport. I should prefer not to look at the Conservative document of 1973 but to consider the consultative document of 1976, which sets out the situation very clearly. Obviously, we shall be reaching conclusions based on that document during the year.

    National Freight Corporation
    Mr. Shepherdasked the Secretary of State for Transport whether he will make a statement on the National Freight Corporation's deficit and what his current estimates of that deficit are.
    The Secretary of State for Transport (Mr. William Rodgers): Yes, Sir, when my review of its financial position is complete. Meanwhile I understand that the 1976 results are likely to be much better than those of 1975.
    Mr. Shepherd: Does the right hon. Gentleman accept that many sectors of the road haulage industry and, indeed, the country as a whole will be pleased to know that the deficit for this year will be less than the £31 million of last year? Does he accept that the remainder of the road haulage industry has to operate in a free market and has to sink or swim according to a profit or loss record? Will he take steps to remove what is, in effect, a hidden subsidy, and ensure that the National Freight Corporation eliminates its deficit?
    Mr. Rodgers: The whole industry has problems, taking one year with another, including good years and bad years. That is the case whether we consider the private sector or the public sector. Both sectors must operate efficiently over a period. I do not think that we should condemn any industry, and certainly not

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    the National Freight Corporation, because it has had a bad year or two. The important thing is that real progress is being made in getting rid of the deficit. Surely we should all be pleased about that.
    Mr. Ronald Atkins: Has my right hon. Friend seen the recent figures from the West German railways which indicate a loss of £1¼ billion despite the German Government's subsidy of £2½ billion a year? I ask my right hon. Friend not to listen to the moans from the Conservative Opposition about losses made by a public transport industry that has the finest financial return in the world.
    Mr. Rodgers: I have no intention of listening to moans. As I have said before in this House, I think we should give support to our publicly-owned industries. We should congratulate them when they do well and try to understand the problems that they face from time to time. I take my hon. Friend's point and I am grateful to him for making it. At the same time, I believe it is in the national interest, and totally commensurate with our wish to see economic growth and an effective industrial strategy, to ensure that freight should pay its way over a period.
    Mr. Moate: Why has the National Freight Corporation to pay for the free rail travel of ex-railway employees whereas British Rail does not have to show in its accounts the cost of the free travel that is given to its employees and ex-employees?
    Mr. Rodgers: I cannot give an answer to that supplementary question. I do not think that that item affects the general size of the Corporation's deficit.
    Mr. Flannery: Will my right hon. Friend reconsider his answer about transport paying its way? Is it not a fact that throughout the world subsidies have to be paid to rail undertakings? Is he aware that our communities nationwide are flung into chaos if rail closes down for half a day or a day? Is not that proof that rail is paying its way? No matter what is said by Conservative Members, is it not a fact that subsidies are paid to rail throughout the world, and that at present subsidies are the only way of keeping transport going, especially the railways in our country?
    Mr. Rodgers: With respect to my hon. Friend, I did not say that transport must pay its way. I said I took the view that over a period freight should pay its way. My hon. Friend is right in pointing out that public transport systems throughout the world are facing problems. We have a great deal to be proud of in this country.

    Speed Limits
    Mr. Rostasked the Secretary of State for Transport if he will make a statement on his proposals to change the road speed limit regulations.
    Mr. Horam: My right hon. Friend has asked representative bodies for their views on the future of the fuel-saving limits by the end of January. The Government will reach a decision in the light of the views expressed.
    Mr. Rost: As the Government have admitted that the 50 and 60 mph speed limits that were introduced during the fuel shortage are contributing only marginally to energy savings, would it not be better to scrap those two limits? Is the Minister satisfied that five different speed limits are necessary? Is he satisfied that they are in any way contributing to the sensible use of the roads by motorists, who are thoroughly confused by the present system?
    Mr. Horam: No, we are not satisfied. That is why we are engaging in consultations. That is why we renewed the fuel-saving limits for only a short period. In any lower speed limits, there is a clear road safety element, which should not be neglected, as well as a fuel-saving element.
    Mr. Whitehead: Does my hon. Friend agree that almost everywhere the regulations are honoured only in the breach, which brings the law generally into disrepute? Does he agree that the figures from his own Department, which were quoted in the recent debate, indicate that the energy saving element is insignificant?
    Mr. Horam: I recognise that the saving is small, but compliance is still surprisingly high.
    Mr. Mawby: Does the hon. Gentleman accept that the longer these temporary arrangements exist the more important it is that the various speed limits

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    should be clearly signed, bearing in mind that many motorists do not know at any time whether they are in breach of the law? The present situation is all right as a temporary arrangement, but if it is to become permanent surely we should have clear signing of the various speed limits.
    Mr. Horam: I should hate to sign them if they were just about to go out. As we are discussing whether they are about to go out, I think we should leave the matter of signing until a decision has been reached.
    Mr. Budgenasked the Secretary of State for Transport what replies he has had on his consultation letter on the 50 and 60 mph speed limits.
    Mr. Horam: Replies to the letter were requested by 31st January, and only a few organisations have submitted views so far.
    Mr. Budgen: Do those replies indicate that there is no widespread public support for these restrictions? Will the Minister confirm that they were introduced only as a crude form of fuel rationing and that they have no justification on safety grounds? Will he note the view expressed from all sides of the House that the restrictions are economic nonsense and are bringing the law into contempt?
    Mr. Horam: So far, we have received only a few replies. To comment on them at this stage might be tendentious as we do not know whether further replies will reflect the same view. The saving achieved by fuel rationing has not been great, but there has been a clear road safety element to which we must pay attention.
    Mr. Lawrence: Will the Minister kindly take note that the National Association of Driving Instructors has amalgamated with the Society of Approved Driving Instructors to form the National Association of Approved Driving Instructors, and that it would like to be consulted on these matters?
    Mr. Horam: Yes.
    Mr. Mellish: Will my hon. Friend tell me where there is a road in London on which I can drive my car at 50 miles per hour?
    Mr. Horam: My right hon. Friend has put a good supplementary question. He is well versed in these matters.

    Motor Vehicle Numbers (Transfers)
    Mr. Peter Bottomleyasked the Secretary of State for Transport what representations he has had concerning new rules for cherished vehicle number transfers.
    Mr. Horam: Various representations have been received from motor traders, dealers in registrations marks and individuals with cherished marks about the effects of the new rules. While the changes should eliminate abuses, the great majority of applicants will be unaffected by them. The operation of the new rules will be kept under close review.
    Mr. Bottomley: Does the hon. Gentleman accept that all applicants will be affected by the charges? Will he confirm that the cost to the Department of transferring these number plates is in the region of £10? Allowing for a small profit of 20 per cent., does he agree that a charge of £12 would be appropriate to those who want to transfer number plates under the new rules?
    Mr. Horam: No. We are intending, with the leave of the House, to charge £50 for a cherished mark transfer. That charge would give the State a comfortable profit, taking into account the costs. I think that that charge is possibly justified in this case, but I should not like to go above £50. This is not a matter exclusively for the owners of Bentleys.
    Mr. Bottomley: Will the hon. Gentleman confirm that the cost to the Department is in the region of £10 and that the profit margin that the Government are now talking about will be 400 per cent.?
    Mr. Horam: I am interested to have two supplementary questions on the same issue. I confirm that the costs are of the order of £15 for these transfers and that we are proposing to charge £50 from 1st March.
    Mr. Carlisle: As the cost to the Department is only £15, is this not a case of the Government grossly abusing their monopoly position to make a monstrous charge?
    Mr. Nicholas Winterton: Just say "Yes".
    Mr. Horam: No. In my view, the charge will discourage frivolous claims while not penalising the bona fide possessor of a personalised number plate. If the hon. and learned Gentleman reads the back pages of the Sunday Times, he will see that the cost of these number plates is very often up to —1,500. Indeed, they have been known to retail for as much as —10,000. What is —50 in relation to that?

    Written-Off Motor Vehicles
    Sir Bernard Braineasked the Secretary of State for Transport whether he will introduce legislation to ensure that vehicles written off by insurance companies are not put back on the road without a full test.
    Mr. Horam: We have examined the situation carefully but the evidence we have at present does not support the view that vehicles which have been written off and reconstructed are a significant road hazard.
    Sir B. Braine: That really will not do. Does the Minister agree that the irresponsible practice of putting back on to the road vehicles which have been totally written off and which may have been cannibalised, which may be dangerous to life and limb, without any form of test is totally unacceptable? Is he further aware that the motoring organisations and the general public expect the Government to stir themselves on this subject at least to consider the possibility of introducing new rules and regulations that will stop this gross abuse?
    Mr. Horam: My right hon. Friend and I take this matter very seriously. The question is, is it a significant factor in road safety problems? We accept that it happens from time to time. Is it a big factor? The only evidence that we have is a survey carried out by West Yorkshire police which showed that, out of 9,600 accidents, not one was caused by faulty repair of a damaged vehicle. Therefore, we have yet to obtain sufficient significant evidence on this matter. I remind the hon. Gentleman that on 1st January we strengthened the MoT test.
    Mr. Arthur Lewis: What is to stop the Minister asking the insurance com-
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    panies—legislation is required—to notify his Department about these vehicles so that examinations may be made? We spent hours on the problem of seat belts. If one life can be saved, surely some action should be taken. Will my hon. Friend tell his civil servants to get off their big fat backsides and do something about it? I must declare a vested interest.
    Mr. Horam: I think that my hon. Friend has two vested interests in the way he phrased that question. Two points concern us about limiting this matter to written-off vehicles. First, a high proportion of vehicles are not comprehensively insured. Secondly, many vehicles are not insured at all. It may be that the most serious cases occur with vehicles which are not insured.
    Mr. Norman Fowler: I ask the Ministed not to underestimate the seriousness of public feeling on this issue. During the last week I have received many examples from all over the country of potentially dangerous cars being put back on the road. As a constructive suggestion, will the hon. Gentleman agree to meet a delegation made up not only of hon. Members but of representatives of consumer and motoring organisations, which will put directly to him the evidence which he suggested does not exist?
    Mr. Horam: As I have tried to explain, we do not underestimate the problem. I should be delighed to receive a delegation. If there is serious evidence which we have not yet found and if the hon. Gentleman will give me the examples to which he referred, I will look into the matter.

    Ports (Competition)
    Mr. Viggersasked the Secretary of State for Transport if he is satisfied with the level of competition between ports in the United Kingdom.
    Mr. William Rodgers: Yes, Sir.
    Mr. Viggers: Does the Secretary of State agree that the main spur to competitive efficiency is the spur of competition and that the best way of ensuring competition is to have the varied ownership of the ports which we have with British Rail and private owners such as Felixstowe, trusts, local authorities and

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    so on? Therefore, will he firmly renounce the Socialist theory of nationalisation of the ports?
    Mr. Rodgers: I certainly cannot give the undertaking for which the hon. Gentleman asked in the second part of his question. As he will recognise, ownership is not necessarily the major factor in industrial success. I welcome the extent to which we have competition between our ports. We have a substantial and successful public sector—the British Transport Docks Board—which has a very good record. We should approach this matter in a commonsense way.
    Mr. Loyden: Regarding competition between ports, has my right hon. Friend seriously considered the question of the shipping conferences which impose an unfair competitive situation on the port of Liverpool, particularly in regard to the Far East trade? Is he aware that there is apparently no power that this House can use to restrict this unfair competition?
    Mr. Rodgers: I certainly take note of what my hon. Friend said. I shall consult my right hon. Friend the Secretary of State for Trade, who is responsible for shipping.

    British Railways
    Mr. Nicholas Wintertonasked the Secretary of State for Transport when he next intends to meet the Chairman of British Railways.
    Mr. Ovendenasked the Secretary of State for Transport when he last met the Chairman of British Railways; and if he will make a statement on this meeting.
    Mr. William Rodgers: I last met the chairman on 20th December. I expect to meet him again soon.
    Mr. Winterton: Does the right hon. Gentleman agree that it is important that an informed debate on the problems of British Railways should take place and that it can take place only if accurate costs line by line and service by service are available to the public? Is he aware that many stations, which could be much more profitable to British Railways, are at present being sacrificed because they are subsidising other areas? Will he
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    bear in mind that this matter is very worrying to the excellent long-serving personnel of British Railways?
    Mr. Rodgers: I am wholly in favour of an informed debate about the problems of the railways, provided always, as I have said before, that we support the chairman and his board in trying to solve the problems facing them in the national interest and that we do not try to manage the railways ourselves. It is not the responsibility of the House of Commons to assume day-to-day interest in details which are properly left to the board appointed by the Government. I am sure that the Chairman of British Railways will note what the hon. Gentleman said. If there is more information which he can usefully publish, I am sure he will seek to do so.
    Mr. Gwilym Roberts:Will my right hon. Friend indicate to the Chairman of British Railways yet again that continual fare increases are counter-productive? Will he give the chairman an assurance about the future of British Railways by indicating that when the economic situation changes, as it must, the Government will again look seriously at the need to extend subsidies to public transport?
    Mr. Rodgers: I am reluctant to make promises on my own behalf or on behalf of successor Ministers to the Chairman of British Railways, because I could possibly mislead him. My hon. Friend will recognise that a substantial subsidy is still made to British Railways, and that will continue. It is provided for in our public expenditure programme.
    I know that the Chairman of British Railways is trying to peg fares through the current year. I only wish that it were true, as my hon. Friend suggested, that if rail fares were reduced in real terms there would be an increase in revenue sufficient to offset the loss. Our experience, particularly in the period 1971–74, is that unfortunately that is not the case.
    Mr. Forman: When the right hon. Gentleman next meets the Chairman of British Railways, will he once more draw his attention to the possibility of productivity increases as one way of restraining the costs of British Railways, as about 70 per cent. of their total costs are now accounted for by wages and salaries?
    Mr. Rodgers: I do not imagine that I should necessarily want to say that to Mr. Parker. I think Mr. Parker would want to say to me that he has been having considerable success in reducing costs within the railway system and that he intends to pursue the course which he has begun of close co-operation with the trade unions to make sure that we have as efficient a railway system as we can manage.
    Mr. Bagier: Will my right hon. Friend ask Mr. Parker, when he next meets him, whether he believes that there could be an alteration in the cost structure applied to British Railways regarding the tremendously high cost of track in comparison with its main competitor, whose roadways are mainly provided free?
    Mr. Rodgers: Yes. This is a familiar issue which has been debated in the House on occasions in the past and will, no doubt, be debated again. The cost of maintaining the railways is very high and it is necessary to have a substantial investment programme. These are the kind of matters which I discuss with the Chairman of British Railways from time to time. They are also matters which we shall discuss in the House when at last, God willing, we have our transport debate.
    Mr. Watt: Is the Secretary of State in a position to allay the fears of NUR and ASLEF members in Scotland about the railway lines north of the Edinburgh-Glasgow axis being axed? When he meets the Chairman of British Railways, will he discuss with him the deplorable—in many cases dangerous—state of the rolling stock presently being used in Scotland?
    Mr. Rodgers: I am sure that the Chairman of British Railways will note what the hon. Gentleman has said. Equally, I would expect him to deny that there is any question of danger. I understand the anxieties of railwaymen because of contractions in the past. Here again, the Chairman of British Railways is pursuing a policy of consultation with the unions on a wider scale than previously, and that is appreciated.

    Road Traffic Licensing
    Mr. Hicksasked the Secretary of State for Transport what plans he has
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    for reforming the road traffic licensing system.
    Mr. McCrindleasked the Secretary of State for Transport what plans he has for reforming the road traffic licensing system.
    Mr. Horam: As the consultation document on transport policy made clear, the case for general changes in bus licensing will have to be examined when we have results from our experiments with various kinds of unconventional services.
    Mr. Hicks: Does not the Minister agree that there is a strong case for transferring the responsibilities for determining bus routes and coach operations from area traffic commissioners to first-tier local authorities? Would not that allow for greater flexibility and understanding of local needs, particularly in rural areas?
    Mr. Horam: Yes. There is a case for that change to be made, and we have had representations to that effect from local authorities during our consultations with interested parties on the consultation document. But we have also had representations the other way from operators and trade unions who believe that the present system has worked well and would like it to continue. This is something that we shall have to decide when we finally make up our mind on transport policy.
    Mr. Pavitt: Has any progress been made in the discussions with the Department of Health on the issuing of licences at the same time as information about kidney donor cards? I am grateful for my hon. Friend's correspondence, but is he aware that since we started it hundreds of people have died merely because no transplant kidneys are available? Will he now, therefore, seek to expedite the arrangements that he is making?
    Mr. Horam: As my hon. Friend knows, I am sympathetic about this matter, and we are trying to do all we can to expedite it. But we have to ensure that the arrangements will work satisfactorily. That is the only thing that is holding up implementation of the scheme.
    Mr. Norman Fowler: I should like to return to the point raised by my hon. Friend the Member for Bodmin (Mr. Hicks). Why should new transport services he prevented from developing to

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    serve the public in rural areas? Why should not commuters have freedom to choose lower-cost coach services? Does not the Under-Secretary agree that the present system is out of date and in urgent need of reform?
    Mr. Horam: The hon. Member neglects the fact that new services are not being prevented from developing. For example, the Norfolk village bus service successfully operates within the existing licensing laws. We are taking measures in this direction. Opposition Members should not rely only on Government initiative for an improvement in the system. Much could be done within the existing licensing laws to improve the system. For instance, the local authorities could make a greater contribution than they do at present.

    Roads and Nationalised Transport (Expenditure)
    Mr. Robin F. Cookasked the Secretary of State for Transport what is the estimated total expenditure on road construction and improvements by central and local government and the estimated combined net investment of the nationalised surface transport industries for the current year.
    Mr. William Rodgers: On road construction and improvements in Great Britain £821 million, and on nationalised surface transport industries £325 million.
    Mr. Cook: Do not those figures show a continuing bias in my right hon. Friend's Department in favour of road construction rather than public transport? Is not Britain one of the few industrial nations which is cutting investment in its rail network? Does my right hon. Friend really believe that the network can get by on the same amount of investment as is available to the Belgian rail system, which has one-fifth of our track mileage?
    Mr. Rodgers: My answer to those questions is "No". I do not agree with my hon. Friend. Those figures of themselves do not represent a valid comparison. One could argue that the roads carry about four times as much freight and nine times as many passengers than the railways, but which is the chicken and which is the egg, which is the horse and which is the cart? Such comparisons are invidious. However, if my hon.
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    Friends says that we must maintain a high level of investment on the railways, of course I agree, but the higher investment must be without prejudice to other decisions that we might make for other forms of transportation.
    Mr. Madden: Has my right hon. Friend read the recent article in The Sunday Times which clearly showed that the heaviest lorries are subject to the lowest tax of all road users? Does that not represent a direct public subsidy for heavy lorries? Before we accept any blandishments from the Common Market to accept heavier and heavier lorries, will my right hon. Friend review the situation?
    Mr. Rodgers: Possible steps were set out in the consultation document and they had a bearing on the Finance Act 1976.

    National Bus Company
    Dr. McDonaldasked the Secretary of State for Transport when he last met the Chairman of the National Bus Company.
    Mr. Beithasked the Secretary of State for Transport when he next expects to meet the Chairman of the National Bus Company.
    Mr. Newensasked the Secretary of State for Transport when next he expects to meet the Chairman of the National Bus Company.
    Mr. William Rodgers: I last saw the Chairman of the National Bus Company at the end of November 1976, and I am to meet him again later this week.
    Dr. McDonald: When my right hon. Friend next meets the Chairman of the National Bus Company, will he discuss the matter of the deficit due to be faced by London Country Bus Services in Essex and surrounding areas next year? Will he discuss what action must be taken to prevent the closure of Grays garage, for example, and the possible disappearance of bus services from Essex? Will he discuss with the chairman ways of preventing this disaster from hitting Essex?
    Mr. Rodgers: I am aware of the particular problems of Essex, where the

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    county council has provided reduced support. The county council does not have a good record in this respect. The services operated by the National Bus Company represent a special problem which my hon. Friend is right to raise.
    Mr. Beith: Will the Secretary of State discuss with the Chairman of the National Bus Company the possibility of devising a national scheme of cheap fares for pensioners to replace local schemes? Does he realise that in many rural areas, where distances are greater and fares consequently higher, no help is available to pensioners? Does he agree that the Government are discouraging local authorities from introducing cheap fare schemes? Is it not better to spread resources widely so that pensioners throughout the country get the same help?
    Mr. Rodgers: This is not so much a matter to discuss with the Chairman of the National Bus Company, although I shall draw his attention to it. These are difficult questions of national policy and involve how much we have available for fare subsidies and the degree of local option. We have discussed the matter in the House before, and I would welcome further discussion.
    Mr. Stan Crowther: Would it not be in the interests of sensible, rationalised transport operations if the undertakings of the National Bus Company in the metropolitan areas were handed over to
    the passenger transport authorities? Is my right hon. Friend willing to initiate talks about this with the Association of Metropolitan Authorities and the Chairman of the National Bus Company?
    Mr. Rodgers: No, I do not think I would agree, though this is very much a legitimate area for discussion. I think it would be found that the different metropolitan areas take different views. Certainly some of them would prefer their writ to run over the NBC; others believe that the present arrangements are the best. I think that it is half a dozen of one and six of the other. The NBC operates national trunk routes, and if these were broken up in order that the metropolitan counties were to run them there would be certain diseconomies and they could become more expensive. However, these are matters that will no doubt be discussed during further con-
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    sultations on the basis of the document published last year.
    Mr. Adley: Is the Secretary of State aware that I came to see his hon. Friend the Under-Secretary some weeks ago, together with Mr. Deputy Speaker, to discuss precisely the sort of way in which the National Bus Company could be persuaded to introduce some form of reduced rate card for old-age pensioners, perhaps along the lines of the British Rail scheme which is available in off-peak hours? Does not the right hon. Gentleman accept that the NBC must have some obligation to offset its virtual monopoly over large tracts of the country? Will he now please take this matter to the Chairman of the NBC on his own initiative?
    Mr. Rodgers: I entirely agree. I want to make it absolutely clear that it is very legitimate to raise the problem of concessionary fares for old people. Many of us think that something ought to be done about it. However, at the same time, we recognise that there is here a large area for local option. If the NBC is to operate successfully within the limits of revenue support, I am afraid that it must be allowed to make many of these decisions on its own account. I shall, however, mention this matter to the chairman, as I have already made clear.

    Parking (City Areas)
    Mr. Eyreasked the Secretary of State for Transport whether he will make a statement as regards his policy on restrictions on parking in cities.
    Mr. William Rodgers: I am continuing to consider this in the course of the preparation of my White Paper.
    Mr. Eyre: Is the Minister aware that a high proportion of the parking in city centres, in Birmingham and other major cities, is done by people engaged in industry, commerce, the professions and the public services, whose jobs require them to be mobile during the working day? Will he bear that very important factor very much in mind during his considerations, because restrictions would hamper these people in the services they provide as well as, more generally, damage the economy of the cities?
    Mr. Rodgers: I shall bear it in mind. I take no dogmatic view. I do not think

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    we can have indiscriminate parking in towns and cities, but I am not in favour of indiscriminate parking restraints. There is a need to find a balance, and here again local views are very important indeed.
    If traffic is to circulate freely in towns and cities, certainly there must be parking restraints of a kind. Equally, however, a total ban on private cars in the areas concerned would cause problems and would have industrial consequences.
    Mr. Spriggs: Will my right hon. Friend take account of the motorists and lorry drivers who park part of their vehicles so as to block footpaths? In many instances people who have to use prams and other footpath vehicles cannot use the footpath and have to go into the roadway to get round a vehicle. What will my right hon. Friend do about that?
    Mr. Rodgers: Like my hon. Friend, I am bothered about the extent to which existing regulations are quite often not effectively enforced. There are difficulties. We know that the police have problems about recruitment at present because of financial restraints. We have to recognise that the level of enforcement falls below the level that both my hon. Friend and I would like to believe could be achieved.

    Transport Integration
    Mr. Ioan Evansasked the Secretary of State for Transport what further consideration has been given to reestablishing an integrated transport system.
    Mr. William Rodgers: My extensive series of meetings with many of those who have submitted major comments on the consultation document has frequently covered this ground.
    Mr. Evans: Before my right hon. Friend introduces the White Paper, will he take a good look at the 1947 Act, introduced by the Labour Government just after the war, and introduce an integrated transport system which is efficient, effective and profitable? Will he look again at the question of an integrated system to take the heavy congested traffic off the roads and on to the under-used railways?
    Mr. Rodgers: Yes, of course I shall look at the 1947 Act and at the whole history of post-war legislation. We have
    1426
    achieved a good deal in that period, but there are still problems. Circumstances change and problems require different solutions. However, I give my hon. Friend the undertaking that he seeks.
    Mr. Gow: What consideration has the Secretary of State given to the possibility of denationalising the National Bus Company? What consultations has he had about the extent to which the present licensing system prevents people being able to travel to work in the way in which they would like, which would often be in buses in competition with British Rail and with the National Bus Company?
    Mr. Rodgers: The answer to the hon. Gentleman's first question is that I have had no consultations and do not propose to have any. The answer to the second question is that, of course, the question of the licensing system, which was mentioned earlier this afternoon, is one of the matters that I have discussed with a number of interests. I shall be reviewing it in the course of completing the preparation before issuing my White Paper.
    Mr. Moateasked the Secretary of State for Transport what steps have been taken since October 1974 to co-ordinate and integrate transport services.
    Mr. William Rodgers: The co-ordination of particular services and of transport operations remains primarily the responsibility of the transport industries and local authorities.
    Mr. Moate: Does the Secretary of State know that the Labour manifesto of 1974 actually promised to co-ordinate and integrate transport services? Two and a half years later, however, we have worse train services, worse bus services, much higher fares and massive subsidies. Is all this due to ministerial incompetence, or was the election promise nonsense?
    Mr. Rodgers: I am delighted to know of the hon. Gentleman's commitment to our 1974 manifesto and I look forward to his urging me on future occasions that it should be fully carried out. We issued a consultation document about a year ago. All those involved in the transport industries have appreciated the opportunity of expressing their views. This is a unique exercise in consultation on transport policies. As I said in reply to

    1427
    an earlier question, circumstances change; and if we can settle on a policy that will carry a large measure of agreement and last to the end of the century the country will be infinitely better off.
    Mr. Mellish: Does my right hon. Friend agree that one of Britain's tragedies is that on that wonderful waterway the River Thames there is hardly any traffic throughout the day? We are the only country that would allow a highway of that kind to be so unused. Is he doing anything about it?
    Mr. Rodgers: I have deep sympathy with my right hon. Friend's views in this respect. Comparisons between, for example, the Thames and the Rhine are certainly striking. On the other hand, the circumstances are different. The Rhine, unlike the Thames, is a main artery of Europe. I should stop at that point, because I must tell the House that waterways are not one of my responsibilities.
    Mr. Stephen Ross: Does the Secretary of State accept that, if he is to have an integrated transport system, he will have to take some unpopular steps about restricting access to inner city areas by private car owners? A typical example of the chaos that results was what happened over the Christmas period when the public services were in very short supply and people brought their cars into London and parked them haphazardly everywhere. Some decision must be made about this.
    Mr. Rodgers: I have already said that there must inevitably be restrictions in towns on the flow of traffic. I suggested earlier, however, that this is an area where there must be a large degree of local decision and local option in an attempt to find a balance. In transport we should not always be going for polarised views. It would be a good idea if we could agree on more things rather than that we should seek opportunities to disagree.

    Railways (Carriage of Pigeons)
    Mr. Martenasked the Secretary of State for Transport if he will now make a statement on the carriage of pigeons on British Rail.
    Mr. Horam: The Railways Board, in consultation with my Department, is still
    1428
    reviewing the carriage of pigeons and animals in the light of the recommendations made by the Central Transport Consultation Committee. In the meantime it is continuing to carry this traffic.
    Mr. Marten: Does the Minister recall that on 1st December his right hon. Friend said that he would complete the review early in the new year? It is now early in the new year. What is causing the delay in this relatively simple little problem? Could he not get a bit of a move on about this matter? If he arrives at a decision between now and 9th February, when Questions to the Secretary of State for Transport next arise, will he let me know?
    Mr. Horam: I shall certainly try to reply before the next Question Time on transport matters. The review will be completed. However, this is a matter for the British Railways Board in the first instance, and the board is looking at the matter vigorously.
    Mr. Viggers: Is the Minister aware that if British Rail stopped carrying racing pigeons that would destroy the sport of pigeon racing? Is he also aware that the only people to come out of the review so far with credit are the pigeons? Will he get a move on?
    Mr. Horam: I am not a pigeon fancier but I know that this sport has great support—almost as much as fishing in my constituency, as far as I am aware. None the less, I take the hon. Gentleman's point and I shall certainly try to get a move on.

    Tachographs
    Mr. Arthur Jonesasked the Secretary of State for Transport what recent representations he has had on the installation of tachographs.
    Mr. William Rodgers: I have received a variety of sometimes conflicting views.
    Mr. Jones: What steps do the Government propose taking to harmonise the situation between the circumstances for lorry drivers on the Continent and in Britain with regard to the installation of tachographs?
    Mr. Rodgers: I have never regarded harmonisation as an essential virtue.

    1429
    There are very different circumstances in the different countries within the Community, and I think that we must proceed in a sensible way. I have said that I would prefer not to see the tachograph in domestic use, and I am not planning to move in that direction. That is where I rest. However, I think that we shall have to feel our way along.
    Mr. Roy Hughes: Taking into consideration the fact that vehicles travelling to other Common Market countries already have to have these instruments installed, are the Government nevertheless convinced of the technical advantages of the tachograph? Will my right hon. Friend further bear in mind that, in countries in which vehicles have these instruments installed, very often they are installed to protect the drivers' interests, but that in this country we have trade union organisations to do that very thing?
    Mr. Rodgers: My hon. Friend makes some very important points. It is very widely understood that if British vehicles travel abroad they must obey the law of the land, and, therefore, use of the tachograph internationally has not been resisted. There is no question about that whatsoever. However, given the circumstances of this country, I do not believe that the institution of the tachograph in domestic use would substantially add in any way to road safety or provide a method of regulation better, as my hon. Friend says, than the methods that have grown up historically here.
    Sir J. Langford-Holt: As part of our membership of the EEC, to what extent are we committed to work towards the introduction of this system?
    Mr. Rodgers: We inherited certain obligations. In that respect, I suppose that it could be said that we are committed to working towards a certain uniformity here. However, I think we should adopt, as I have said, a commonsense and relaxed attitude. There are conflicting views and there are problems to be reconciled. We must accept our obligations as a member of the Community, but we must also recognise our own problems at home.

    Heavy Freight Transport (Yorkshire-Lancashire)
    Mr. Andrew F. Bennettasked the Secretary of State for Transport what proposals he has for the improvement and integration of means of heavy freight transport between the industrial areas of Yorkshire and Lancashire, and in particular between Manchester and Sheffield.
    Mr. Horam: There are already fairly good road and rail links for heavy traffic between Yorkshire and Lancashire. We are considering the case for improving the road links between Manchester and Sheffield.
    Mr. Bennett: Is my hon. Friend aware that there are strong rumours in the Greater Manchester area to the effect that British Railways intend to close the line between Sheffield and Manchester via Woodhead? Will he deny these rumours and once again stress that the Labour Government are committed to an integrated transport policy and that it would be disastrous in that area to close a railway line and thus put further traffic on to already congested roads?
    Mr. Horam: I agree with my hon. Friend that it would be a mistake to put further traffic on to already congested roads. We are about to consider the question whether there should be additional road links between Manchester and Sheffield. The question of the rail link is essentially a matter for the board of British Railways, but it should certainly bear in mind the considerations my hon. Friend has mentioned.
    Mr. Flannery: Will my hon. Friend accept from me as a Sheffield Member that there is very strong feeling in Sheffield as well as in Manchester about the projected closure of this railway link and that only this morning the Sheffield Press reported that there was a distinct likelihood of strike action, so deep is the feeling about the possible severance of this link?
    Mr. Horam: I note what my hon. Friend says, but this is in the first instance a matter for the board of British Railways. The board is under an obligation, laid down by the House, to make a profit, or at least not to lose money, on its freight traffic, and it must make this

    1431
    its first consideration, although it must also bear in mind the other considerations my hon. Friend has raised.

    Railways (Carriage of Freight)
    Mr. Bagierasked the Secretary of State for Transport whether he has now received the report of the British Railways Board's review of its rail freight operations; and if he will make a statement.
    Mr. William Rodgers: Not yet.
    Mr. Bagier: I hope that the report, when received, will contain proposals that the major movers of freight in Britain should be urged to utilise the rail system more fully than at present. Does not my right hon. Friend agree that it makes sense, accepting that we own these highways, fully to use the capacity they provide?
    Mr. Rodgers: I entirely agree about making the best use of the available capacity of the railways. I am very happy to draw attention again to the extent to which the railways can provide a very effective, efficient and worthwhile freight system. Perhaps I should simply say that as the studies have worked out they should be seen as a continuing process of revising assumptions about the freight business, and it may be that I shall not receive a report in the formal way which was hitherto, perhaps, expected.
    Mr. Stephen Ross: When the right hon. Gentleman receives the report from British Railways, will he ensure that a siding is provided to Covent Garden Market, because there is some important business for British Railways to pick up from the South African fruit trade there?
    Mr. Rodgers: Yes, I can give that undertaking.
    Mr. Spearing: Does my right hon. Friend realise that the route between Manchester and Sheffield by the electrified ex-Great Central line is now entirely a freight service? In respect of his comments about good freight services, why are British Railways contemplating abandoning a line that was electrified as long ago as 1948 and from which all passenger services have now been withdrawn and putting on a non-electrified line between Sheffield and Manchester? Would it not be better to revert to the original plan?
    Mr. Rodgers: I would not want to make any assumptions about British Railways' intentions for that line or any other line. If we want to have effective rail freight services, we must allow British Railways a large element of discretion to pursue their studies and make their decision. I should like to believe that rail freight could be a profitable business.

    Motor Cyclists (Accidents)
    Mr. Mawbyasked the Secretary of State for Transport how many motor cyclists have been killed or injured in 1976.
    Mr. Horam: Data for the whole of 1976 are not yet available, but it is estimated from incomplete returns that the total number of such casualties in Great Britain was about 69,000.
    Mr. Mawby: Does the Minister agree that those cold statistics reveal a terrible waste of young lives and that it is important to do everything possible to reduce the wastage? As things stand, any youngster aged 17 can buy a motor cycle and take it straight out on to the road with a provisional licence. Does the hon. Gentleman agree that every encouragement should be given to the training schemes which now exist, in particular the RAC-ACU scheme, and that we should work towards the objective of making full training available for every motor cyclist?
    Mr. Horam: Yes, my right hon. Friend and I are very concerned about these dreadful figures. This is one of the most important matters in road safety. We have done something through legislation to limit this problem by the restriction we put on the maximum design speed capacity of mopeds: they are now limited to 30 m.p.h. That restriction comes into force in July. I agree also that we should support to the fullest extent the training schemes which are now expanding.
    Mr. Norman Fowler: These are truly appalling figures. As the casualty rate is greatest amongst the 16 to 18-year-olds, is it not essential that there should be much wider training of motor cyclists? Without any disrespect to the existing scheme, does the hon. Gentleman agree with the suggestion which has been made that an inquiry should be set up so that

    1433
    we can have a truly national scheme for training motor cyclists?
    Mr. Horam: I am not at present in favour of an inquiry, which could slow down progress. We have some pretty good progress to be made on the STEP educational scheme in schools. We should push that as far as possible before taking things further.
    Mr. Bagier: Is my hon. Friend aware that motor cycle retailers are concerned about the fact that a youngster can buy a high-powered motor cycle and simply drive off with L-plates? Have they not made approaches to my hon. Friend suggesting a form of training, towards which they are prepared to provide funds and expertise? They are deeply concerned and want to help.
    Mr. Horam: My hon. Friend is right. The motor cycle industry is concerned and is already making a contribution towards the STEP training scheme, which, as I said, is going very well.

    MR. PHILIP AGEE
    Mrs. Hart: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and import ant matter that should have urgent consideration; namely,
    "the need for the Home Secretary to fulfil today the commitment given to the House in 1971 by his predecessor by authorising his Advisory Panel to reveal to Mr. Philip Agee at once those particulars of the allegations against him which do not entail disclosure of sources of evidence."
    That the matter is urgent there can be no doubt. The Advisory Panel sat yesterday, is sitting today and is likely to conclude its hearings during tomorrow or at the latest on Friday. The urgency therefore is apparent to every hon. Member. It is a matter of public importance because it concerns the threat to natural justice which will be involved in the present proceedings if no further information can be made available to Mr. Agee about the charges made against him than he has so far been given.
    During Report stage of the debates on the Immigration Bill, under which the present Advisory Panel has been set up to consider the cases of Mr. Agee and Mr. Hosenball, the then Home Secretary,
    1434
    the right hon. Member for Chipping Barnet (Mr. Maudling), gave a clear assurance to the House. Referring to cases brought on grounds of national security, he said:
    "The person concerned is notified of the decision and he will be given by the Home Office such particulars of allegations as will not entail disclosure of sources of evidence."—[Official Report, 15th June 1971; Vol. 819, c. 376.]
    I understand that at yesterday's hearing—I have the best available transcript or quotation—Sir Derek Hilton, the Chairman of the Advisory Panel, addressing Mr. Agee's lawyer, said:
    "We realise your difficulties and we have difficulties of our own."
    He went on to explain that he could not recommend that the proceedings be adjourned to give particulars. He said:
    "It seems plain to us that Parliament recommended that these were political decisions of an executive character. It would be subject to Parliament. This is in the realm of politics. We do not believe we can do what you have asked us to do."
    The reason that this matter should be debated as a matter of urgency is that I do not believe that the Home Secretary is fulfilling the commitment given by his predecessor in debates on what became the Immigration Act. That commitment has not been modified by any subsequent statement, by any subsequent Home Secretary. Nor do I believe that it would be totally impossible to reveal to Mr. Agee or his lawyer some further particulars which would assist him in dealing with what are so far totally unknown charges without threatening the disclosure of sources of information.
    Mr. Speaker: The right hon. Member for Lanark (Mrs. Hart) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that she thinks should have urgent consideration, namely,
    "the need for the Home Secretary to fulfil today the commitment given to the House in 1971 by his predecessor by authorising his Advisory Panel to reveal to Mr. Philip Agee at once those particulars of the allegations against him which do not entail disclosure of sources of evidence".
    As the House knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the Order but to give no reasons for my decision. I decide not on the importance of the matter but on whether it

    1435
    should take priority over the business of the House.
    I have given careful consideration to the representations of the right hon. Lady, but I have to rule that her submission does not fall within the provisions of the Standing Order and that therefore I cannot submit her application to the House.

    BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 21ST JANUARY
    Members successful in the Ballot were:

    Mr. Bruce George.

    Mr. Ted Fletcher.

    Mr. Brian Sedgemore.

  BILL PRESENTED
    INTERNATIONAL FINANCE, TRADE AND AID
    The Chancellor of the Exchequer, supported by Mr. Secretary Dell, Mr. Joel Barnett, Mr. Robert Sheldon, Mr. Frank Judd, Mr. Denzil Davies, and Mr. Michael Meacher, presented a Bill to make provision for the payment of further subscriptions to the International Monetary Fund and for raising the limit on loans under the International Monetary Fund Act 1962; to enable effect to be given to certain amendments of the Articles of Agreement of that Fund; to amend the Export Guarantees Act 1975; to make further provision about the finances of the Commonwealth Development Corporation; to amend Section 2 of the Overseas Air Act 1968; and for purposes connected therewith: and the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 43.]

STATUTORY INSTRUMENTS, &c.
Ordered,
That the Herring By-Catch (Restrictions on Landing) (No. 2) Order 1976 (S.I. 1976, No. 2094) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Ashton.]

ORDERS OF THE DAY
  SUPPLY
  [3RD ALLOTTED DAY]—considered.

  DEFENCE
  Mr. Speaker: Before we begin our business for the day, I must tell the House that an unusually large number of right hon. and hon. Members have indicated that they hope to catch my eye during the day. Obviously, they will not all get in, although it appears that a large number of hon. Members are secretaries, deputy secretaries, chairmen or vice-chairmen of various defence groups in the House. I know that there are also hon. Members with important constituency interests. I can only tell the House once again that the number of hon. Members I shall be able to call depends largely on the length of the speeches of those who are fortunate enough to catch my eye.
  I should also tell the House that I have decided to call the amendment in the names of the hon. Member for Salford, East (Mr. Allaun) and his right hon. and hon. Friends.
  3.37 p.m.
  Mr. Ian Gilmour: I beg to move,
  That the salary of the Secretary of State for Defence should be reduced by half.
  This motion is directed against the Secretary of State because we strongly believe that he should have resigned his office, but our condemnation goes far wider than that. We condemn the whole so-called defence policy of the Labour Government since they came to power in 1974. They have cut, or plan to cut, defence expenditure by over £8,000 million, they have gravely diminished our defence capabilities, they have damaged defence industries and they have lowered the morale of our Armed Forces.
  The House will have been interested recently to read the reports of Cabinet meetings. I am referring not to all the copious leaks from the Cabinet about its agonising over the IMF loan but to the reports of Cabinet meetings in 1946. They record how Ernest Bevin came to recognise that, after the defeat of Germany, Soviet Russia provided the real threat to this country. We can well

  1437
  imagine the caustic and contemptuous terms in which Ernest Bevin would have condemned the unilateral disarmament practised by this Government. The contrast between the realism of Bevin and Attlee and the neglect of our forces by the present Government merely shows how far the Labour Party has deteriorated under the leadership of the right hon. Member for Huyton (Sir H. Wilson) and the present Prime Minister.
  To give the Government their due, they do not pretend that their defence policy has much to do with defence. It bears very small relation either to our defence needs or to the international situation. They are concerned with quite different matters. That is where the profound difference between the two sides of the House lies.
  We believe, as my right hon. Friend the Leader of the Opposition has said, that it is the first duty of every Government to safeguard their people against external aggression and to guarantee the survival of their way of life. It follows that defence policy should be based on the defence needs of the country. That is elementary but, unfortunately, it is too advanced for the Labour Party. The Labour Party does not believe that. Its priorities lie elsewhere and, as a result, the Labour Government cut defence to be able to spend in other fields.
  As I said, the Government do not claim that their defence policy is related to defence needs. They have produced two defence White Papers, in both of which they have chillingly depicted the great threat posed by the Russians. It was clear from the 1976 White Paper that the balance had deteriorated against the West by about 8 per cent. In both White Papers the Government spelt out that the Russians were increasing in strength. They then drew the totally irrational conclusion that therefore we should reduce our defences. As the Russians get stronger, the Government say, we should get weaker. We believe that that is an abdication of duty by the Government.
  It needs no great application of logic or knowledge to show that our defences are now below the critical level, because in July 1975 the then Chief of the Defence Staff, Field-Marshal Carver, said publicly on television that we were down to "absolute bedrock". Field-Marshal
  1438
  Carver is a man who chooses his words carefully. Since he made those remarks, the Government have cut defence expenditure on three occasions. If we were down to absolute bedrock and then three further cuts are made it is plain that we are now below bedrock and, therefore, below the critical level of defence. That is plain—QED. That is why the Chiefs of Staff went to see the Prime Minister before Christmas. That leads me to the conduct of the Secretary of State for Defence.
  When I asked the Chancellor of the Exchequer, after his statement on the economic situation, whether he would confirm that these latest cuts endangered Britain's defences and the unity of the Western Alliance, he replied that that was not the sort of question that should be asked and that it was contrary to normal practice. In ordinary circumstances that would have been right, but the Chancellor of the Exchequer ignored, rather wisely, what the Secretary of State had said the day before. In answer to a similar question by me on the previous day, the Secretary of State said:
  "The Chiefs of Staff must speak for themselves".
  When will he allow them to speak for themselves? Can they speak for themselves? What did he mean by that?
  The Secretary of State for Defence (Mr. Frederick Mulley): The right hon. Gentleman earlier gave the answer. He said that Field-Marshal Carver did speak for himself when he was Chief of the Defence Staff.
  Mr. Gilmour: I take that to mean that the Secretary of State is admitting my charge. If what the Secretary of State said has any meaning at all, he is admitting that the Chiefs of Staff think that our Forces are now below the critical level. The Secretary of State's intervention can mean nothing else, but that does not lie very well with what he went on to say. Having said that the Chiefs of Staff must speak for themselves, he went on to say:
  "they do not feel that our defence is below the critical level."—[Official Report, 14th December 1976; Vol. 922, c. 1172.]
  On the next day the Chancellor of the Exchequer wisely did not commit himself to that extremely rash statement by the right hon. Gentleman. If the Secretary of State says again this afternoon

  1439
  that the Chiefs of Staff do not think that we are below the critical level, we shall not believe a word he says. We shall not believe him unless he fulfils his undertaking in the first part of his answer to let the Chiefs of Staff speak for themselves. If he does not, we shall not believe him. His credibility is extremely low.
  Mr. John Cronin: It is a novel and extraordinary constitutional doctrine that a Minister's advisers or civil servants should speak their opinions in public. Is not the right hon. Gentleman being unfair to the Chiefs of Staff? If our defences are being cut to well below the critical level, as he suggested, have not the Chiefs of Staff a duty to resign?
  Mr. Gilmour: I was quoting the Secretary of State. It was he who said that the Chiefs of Staff must speak for themselves. The hon. Gentleman's quarrel is with him, not with me. Secondly, I do not believe that it is the duty of the Chiefs of Staff to resign. I believe that it is the duty of the Secretary of State to resign, and I shall explain why.
  The Chiefs of Staff went to the Prime Minister because they were gravely alarmed about the state of our defence forces. We all know that the Chiefs of Staff often see the Prime Minister and other Ministers in the ordinary course of events, but this was not the ordinary course of events. We also know that the Prime Minister often wants to see the Chiefs of Staff.
  What is very unusual—despite what the right hon. Gentleman said before Christmas—is for the Chiefs of Staff to ask for their constitutional right of audience with the Prime Minister. That is very unusual, and they did it because they were gravely alarmed. If the Secretary of State shares the apprehension of the Chiefs of Staff, obviously he should have resigned. I think the Secretary of State for Defence must have agreed with the grave apprehensions of his Chiefs of Staff. I find it difficult to see how he could disagree with them. If he did, I hope he will tell us the source of his information or knowledge which enabled him to disagree with them. And if he did disagree, if he found himself in puny disagreement with the Chiefs of Staff out of ignorance or because he had
  1440
  different priorities, he merely showed that defence was not his primary interest. If that is so he has lost, and deserves to lose, the confidence of his professional advisers and of the Armed Forces.
  The right hon. Gentleman has also lost the confidence of our allies, because when he attended a NATO meeting which came out in favour of defence expenditure he did not dare say that the cuts would take place. Either way, the Secretary of State should resign. He can be of no further good. For all his amiability—we all like him personally—he can be no good. In a very weak Government he is now a total passenger. He would have done his reputation a great deal of good by resigning.
  In fairness to the Secretary of State, it is not his fault entirely. We blame just as much the Prime Minister, the previous Prime Minister, the Chancellor of the Exchequer and the whole Government. The Secretary of State knows well that even before these cuts there was a considerable morale problem in the Forces. At least one instance has been given to him by the Opposition, and there are many others.
  This is not surprising, because the right hon. Gentleman may be able to fool certain people in this House but there are two groups he cannot fool—the Armed Forces and the Russians. Both our Armed Forces and the Russians know the facts. Our Armed Forces know of the enormous Russian build-up which is taking place. General Haig, the Supreme Allied Commander, pointed out this week that in Eastern Europe in the last few years the Russians have raised their tank strength by 40 per cent. and their artillery strength by 50 per cent. Our Armed Forces know that. They also know about the great increase in the Russian navy and that this enormous expansion of Russian maritime capability gives the Russians, as the right hon. Gentleman's own NATO communiqué said, a chance to bring military pressure to bear all over the world.
  Our Armed Forces also know—and we hear less about this than about the threatening Russian naval strength—about the very grave, increasing and striking growth in the Russian air force. The Soviet Air Force now adds one combat wing per month to its front line. To put it another way, as the Chief of the

  1441
  Defence Staff said in the summer, they are building 1,800 military aircraft a year, of which 800 are of the most modern types.
  Faced with this increasing threat, our Armed Forces find their strength being continuously reduced by the Government. The Chancellor of the Exchequer said in 1968, when he was Secretary of State for Defence:
  "I think the Services can be rightly very upset at the continuous series of defence reviews which the Government has been forced by economic circumstances—and maybe economic mistakes too—to carry out."
  That is even more true today. I hope that the right hon. Gentleman will not tell us today that these cuts will not damage our contribution to NATO. We know that they will, just as the previous cuts did. Wherever they fall, they will do damage, perhaps most of all if they fall in the Eastern Mediterranean. All our troops know that. They have had their spares, their ammunition and their fuel cut. They know that shortages affect their training and their efficiency and cannot fail to affect their morale.
  We read today about the 5 per cent. cut in naval fuel and the effect that this will have on the Royal Navy. I hope that the House realises that this is a result not of the latest defence cuts but of the last cuts but one, or perhaps even the last cuts but two. We do not know the results yet of the present cuts.
  I want to read an extract from the minutes of evidence given before the Defence and External Affairs Sub-Committee of the Expenditure Committee, the report of which came out yesterday. My hon. Friend the Member for Hampstead (Mr. Finsberg) asked the witness:
  "On the consumption of fuel, you refer to a 5 per cent. reduction in naval fuel consumption. What constraints is this going to place on the Navy in carrying out its normal peace-time role?"
  The reply was:
  "The main constraint that fuel reduction involves is a reduction in speeds of passage. The effects of this are threefold: ship availability is reduced because ships take longer to carry out a given mission; training standards suffer because most military evolutions require high speeds. If a ship is proceeding at an economical cruising speed, it probably cannot carry out military evolutions realistically. There are also effects on manpower where perhaps a sailor is at sea when he could have been at home if the ship had gone faster."
  1442
  What a way to run a navy. The Armed Forces are almost the only people in this country now who do not go on strike, but the Government are well able to meet that challenge—they impose a general go-slow upon them. That applies not only to the Royal Navy but to the Army and the Royal Air Force as well.
  Fortunately, this effect on morale has not yet reached our forces in Northern Ireland—or at least it had not done so when I visited them in November. Morale there was very high still. But the Government need to be careful. Our troops in Northern Ireland are carrying out a most dangerous, difficult and thankless task with exemplary courage, fortitude and forbearance. Surely the least they can expect is a Government who do not cut security whenever they have a chance. The Government must realise that they are taking a risk, not only elsewhere but in Northern Ireland as well.
  The Tory attitude to defence is, of course, quite different from that of the Government. We believe that the defence of the country and the freedom of the West comes before everything else. None of the desirable things that everyone wants to do can be securely achieved unless our defences are properly maintained. Nor can detente. Detente means the relaxation of tension, but there is no possibility of genuine detente unless Western strength is maintained. The sort of detente we have at present, in which we relax and the Russians do not, is no good at all. We are all in favour of detente provided that it is genuine and provided that it is mutual, but we shall never achieve it by unilateral disarmament. The world is becoming increasingly interdependent and also increasingly unstable. As the late Alastair Buchan said in his Reith lectures:
  "There has been a quantitative change of colossal proportions in the inter-dependence of Western societies and in the demands we make on natural resources."
  The result of that change is that diplomacy is much more complex and that defence of Western interests requires a much wider range of instruments of policy than defence alone. But the preservation—or, rather, the redress—of the military balance is the fundamental precondition, and anyone who thinks that freedom can be preserved without our being able to defend ourselves should have a word with the Poles and the Czechs. Moreover, because of the long lead time of modern

  1443
  weapons, one cannot rearm overnight. One has to start long before the greatest point of danger is reached, and the Russian arms build-up is gathering pace.
  So when we return to power we shall strengthen our defences. We believe that to be vital, and our allies agree. The Supreme Allied Commander said recently:
  "All the nations of the Alliance need to do more if we are to maintain a credible balance."
  At present, the Government are doing less and less, and we shall reverse that process.
  But, of course, it is not only we on this side of the House who deplore the Government's defence policy. It is not only we and the Chiefs of Staff who are concerned about the weakness of the country. The all-party Defence and External Affairs Sub-Committee, which does invaluable work for the House, had this to say in January 1976:
  "The United Kingdom's contribution to collective defence cannot be significantly reduced without risking a serious loss of confidence among members of the NATO Alliance, on which our national security depends.
  "Our forces are small and our reserves are few …. We consider that the House should be aware of the consequences for our defence capability and for our contribution to the NATO Alliance if further major cuts were to be imposed."
  As we know, the Government ignored that warning and imposed three more rounds of cuts. The cuts next year will be not far short of £1,000 million, and in the year after that £2,000 million.
  Our allies were deeply anxious before the latest cuts. Dr. Luns has given grave warnings, and in London last November the Supreme Allied Commander said that those Western leaders who thought that they could solve their internal problems by cutting defence were confused. He did not say which politicians he thought were confused but we all know who he meant.
  Mr. Frank Allaun: I thank the hon. Gentleman for giving way. He is more courteous than some of his hon. Friends.
  The Shadow Defence Secretary has twice spoken of three sets of cuts. Will he accept from me that our arms bill in the last four years has gone up in cash terms from £3.8 million to £6.1 million and that in real terms, at 1975 constant prices, there has been an increase of £200
  1444
  million a year in that period? That is even without allowing for the £571 million Supplementary Estimate last month.
  Mr. Gilmour: I do not think the hon. Gentleman has noticed the inflation that has been going on under his own Government. As he well knows, defence has been cut very substantially indeed. That should be a matter of great moment to anyone concerned with the defence of the West. Those who are not concerned with the defence of the West do not have to worry.
  As General Haig said, there has been an expansion in Russian military capability, and fortunately our allies have all reacted differently from the way in which the Government have reacted. We must consider why the Government are so sharply out of step with our allies in the West and why they are acting directly contrary to the national interest.
  In the debate just before Christmas the Minister of State for Defence said,
  "It would be irresponsible for any Government to make any major reduction in our defence spending outside the contexxt of the mutual and balanced force reductions ".—[Official Report, 14th December, 1976; Vol. 922, c. 1241.]
  I do not know where the Minister of State has been during the last two years but that is exactly what the Government have been doing for the last two years. They have unilaterally disarmed this country while the Russians have been rearming. On the Minister's own showing, therefore, his own Government are irresponsible.
  Irresponsibility and sheer ineptitude are no doubt part of the explanation, but they are only part of the explanation, for the Government's disastrous conduct. The real explanation is the one pointed to by the hon. Member for Berwick and East Lothian (Mr. Mackintosh) in his article in The Times on 15th December when he said that what the Cabinet was considering, when it was considering the Government expenditure cuts, was not the essential needs of the country but what it could get through the Labour Party.
  As many hon. Gentlemen below the Gangway do not like any defence spending for Britain at all, defence cuts are, of course, the easiest way of keeping them sweet, if that is the right word, and

  1445
  stopping the party from splitting. Thus the national interest is disregarded in order to propitiate men whose commitment to free institutions, and the defence of the West, is neither enthusiastic nor conspicuous.
  In the short debate on defence before Christmas one or two hon. Members below the Gangway complained of our suggestion that they were not concerned with the defence of this country. If they are concerned with the defence of this country, they have a very funny way of showing it. They lose no opportunity whatever of trying to weaken the defence of this country and trying to weaken the Western alliance.
  It goes without saying that it is quite unjustifiable for the Government to decide their policy not on national needs but on mere convenience of party management. It is also very stupid, because the Left is insatiable and will never be satisfied with defence cuts. The only thing that will satisfy the Left will be to abolish defence altogether.
  Labour's absurd programme for Britain 1976, which was overwhelmingly endorsed by the last Labour conference, proposed further cuts of £1,200 million a year at 1976 prices. Cuts of that sort would totally cripple our defences. No doubt that is the intention. We should be left virtually defenceless.
  The House need not take my word for that. I can quote as witnesses two present members of the Cabinet. When the House has been reminded of what they had to say it will not be surprised that the present Prime Minister removed them from the Ministry of Defence and installed the present management. When he was Minister of State for Defence the now Secretary of State for Transport said that cuts of this size would
  "so severely undermine the position of NATO that we could see a complete reversal of the situation that has existed since 1945."—[Official Report, 15th June 1976; Vol. 913, c. 301.]
  The then Secretary of State for Defence said on 13th July:
  "Any further reduction—even of much less than £1,000 million a year by 1980—"
  I wonder what he meant by that? I would think something like the cuts that we have had since he made those remarks—
  1446
  "would require savage cuts in the Armed Forces and many equipment orders would have to be cancelled. Our allies would no longer regard us as serious allies and partners. The disarray that would be caused in the NATO Alliance would place at risk the whole of the security of Europe, not least our own. Our enemies would be able to take advantage of our weaknesses."
  Referring to the cuts of £1,000 million, he said that such cuts would entail at best a policy of neutrality and at worst surrender.
  Yet that is the policy of the Labour Party. It is the policy of the Labour Party Conference. It is the policy of the Labour Party National Executive Committee on which the Secretary of State sits and it is the policy of the Tribune Group. But of course the Tribune Group goes even further.
  A Tribune Group document issued in July agrees that there is a contradiction between many of the aims of Labour Programme 1976 and adds:
  "and the fundamental commitment, accepted by all British Governments for the past quarter of a century, to NATO and other military alliances. These are designed to achieve security and stability for existing regimes which are situated within the Western sphere of influence. This end is in many cases incompatible with support for movements seeking to achieve radical social change".
  I take it that by that the Tribune Group means Communist revolution. It goes on:
  "In the absence of positive steps towards mutual and concurrent phasing out of NATO we consider that Britain should progressively reduce her commitment to NATO."
  It certainly would.
  That document must have caused great satisfaction in the Kremlin but, unfortunately, nowhere else, because the attitude of the Labour Left Wing is unique outside Russia and the Warsaw Pact. The Chinese are certainly very anxious that Western defence should be maintained and they despise those who seek to weaken it.
  Marshal Tito, who is not a very Right-wing figure, also takes a very different line on defence from the many vocal hon. Gentlemen below the Gangway. Speaking on 20th December he said that Yugoslavia must improve its national defence so that
  "it would be capable … of deterring a would-be aggressor".

  1447
  I doubt whether even Government supporters below the Gangway think that Marshal Tito believes that NATO or the West is the would-be aggressor. We all know from where Marshal Tito thinks the aggression is likely to come.
  Even the Italian Communist Party is more pro-NATO than the Tribune Group. In June, Signor Berlingeur said that he did not want to leave NATO. He went on:
  "I feel more secure staying in".
  The Tribune Group really should get together with the Italian Communists. They would find them a most civilising and Westernising influence.
  Mr. Stanley Newens: I am grateful to the right hon. Gentleman for giving me an opportunity to say a word about this. Instead of basing our policies on the situation in Britain, about which we are concerned and about which the British people are concerned, is he suggesting that we should base our policies on what emanates from the Italian Communist Party, the Chinese, the Yugoslavs or, for that matter, Moscow? We in the Tribune Group believe that our defence policies should be based on British interests. That is what that document was about.
  Mr. Gilmour: The hon. Member for Harlow (Mr. Newens) fell below his usual level in that intervention. I was trying to suggest as tactfully as I could that the Tribune Group's foreign policy seems to be based on Russian interests and not on Western interests. Therefore, the Tribune Group is on its own, and it is futile and damaging of the Government to subordinate the national interest to trying to maintain Left-wing support.
  The Government's record since 1974 and their continued obeisance to the Left is a shameful story. This has happened in other areas as well, but the difference is that in other areas the Left has normally stopped the Government from doing the right thing. In defence, it merely forces the Government to do the wrong thing.
  From the national point of view, there is no conceivable justification for these cuts. We know, because the right hon. Member for Newham, North-East (Mr. Prentice) has told us, that there was no careful consideration of our capabilities or of our commitments. We know that
  1448
  these cuts will weaken our contribution to NATO. We know that our allies are appalled by them. We know that the Chiefs of Staff are gravely alarmed by them. We know that the Government's sole reason is to propitiate the Left.
  There is only one possible conclusion to be drawn. It is that the Secretary of State and the Government have put their party before their country. They have failed in their national duty, and I hope that the House will support this motion.
  4.13 p.m.
  The Secretary of State for Defence (Mr. Frederick Mulley): I am grateful to the right hon. Member for Chesham and Amersham (Mr. Gilmour) for giving us the opportunity to debate the important subject of defence in advance of the publication of the annual White Paper next month. I am particularly glad to have the chance to put some facts on the record since the serious and outrageous allegations which he made against the Government cannot be sustained on a basis of the facts and assessments—political, military or in terms of public expenditure. I shall try to cover the major issues—the principles of our defence policy, what the right hon. Gentleman called the Soviet threat, our contribution to the Alliance, the figures of defence expenditure and the state of our forces, including the points he raised about the position of the Chiefs of Staff.
  Britain's defence rests firmly on the North Atlantic Alliance. Our commitment to NATO is an absolute one. Our security depends on the cohesion of the Alliance, and this in turn depends on the maintenance of a significant and effective contribution from us. The central point we are debating today is the size and character that this contribution should be.
  The right hon. Member for Chesham and Amersham argued that NATO's forces were too small in relation to the threat from the Warsaw Pact. It is of course true, as my predecessor made clear in last year's White Paper, that the military capability of the Warsaw Pact continues to grow. No one would deny this. We estimate that over the last three years the Soviet Union has increased its defence expenditure by 5 per cent. in real terms and now spends between 11 per cent. and 12 per cent. of GNP on the

  1449
  development of new weapons and on the maintenance of its armed forces.
  I accept, of course, that comparative percentages of GNP can be only a rough and ready guide to military capacity, since they depend upon the relative levels of income and rates of economic growth which may in consequence produce a much greater defence capacity from a lower percentage of GNP. Nevertheless, there is no doubt that the Warsaw Pact forces have increased in quantity and, more importantly, in quality. The lead in military technology that the West has hitherto enjoyed is being eroded as Soviet scientific and industrial capacity expands.
  It is for this reason that it is essential to achieve progress in arms control and disarmament. We have to find ways of achieving stability—[interruption.] If Opposition Members would not like to see the level of armaments all over the world reduced, I am sorry for them and for the people whom they represent.
  Mr. Michael Brotherton: Would not it be fair to say that if Iron Curtain countries are spending more on their own defence, it is ridiculous that we should cut our own defences? Is it not foolish for the Secretary of State to say that just because there is a danger from the East, therefore, we should cut our own expenditure in the West?
  Mr. Mulley: If the hon. Gentleman will do me the courtesy of listening to the rest of my speech, he will find that I could not in a couple of paragraphs deal with all the matters that he raised.
  Mr. Brotherton: Answer my question.
  Mr. Mulley: The short answer to the hon. Gentleman is that this was equally a relevant factor in 1973, to which I shall come later in my remarks.
  I am sure, despite the evidence to the contrary, that it is the hope on both sides of the House that 1977 will bring success in the SALT talks, which are of such vital importance to us all in the West—and in the rest of the world, too—as well as in the Vienna negotiations on mutual and balanced force reductions in Central Europe. We must all hope that the Soviet leaders will come to realise that continued growth in military power, especially the imbalance of forces in Cen-
  1450
  tral Europe, threatens to undermine the stability of Europe and, therefore, of the world.
  Mr. Peter Walker: Although I agree with the right hon. Gentleman about that, does not he agree that the Soviet Union is more likely to take disarmament seriously when the imbalance is going against it rather than very much in its favour?
  Mr. Mulley: Certainly it is the case that we have to sustain the level of NATO forces. I shall be coming on to deal with that matter and the very substantial contribution which we make to NATO—incidentally, rather more than was made at the time when the right hon. Member for Worcester (Mr. Walker) was himself a member of the then Government.
  The Warsaw Pact's military capability does not by itself constitute a threat to the security of the West. We have to look also at its intentions. There is no reason to believe that the Warsaw Pact is likely to attack NATO. In recent years tension between East and West has been markedly reduced. But political intentions can change quickly while a buildup of military strength is inevitably a slow process. Indeed, the increases in Soviet forces which we have noted in recent years must reflect decisions taken several years ago. NATO must therefore maintain forces in sufficient strength to deter any form of aggression and must maintain the will and the determination to resist it.
  The essential feature of the North Atlantic Alliance is, as I have said, its collective nature. Naturally, the United States makes by far the largest contribution to the military forces of the Alliance, but she cannot be expected to shoulder the whole burden. The European members of the Alliance and Canada must all make an appropriate contribution.
  In the defence review the Government decided to concentrate Britain's effort in those areas where we can make the most significant contribution. These are the central region and the Eastern Atlantic and Channel areas, together with the security of the United Kingdom and its immediate approaches, and our contribution to the NATO's nuclear forces. In these vital areas the defence review did

  1451
  not materially change the effectiveness of our contribution.
  Mr. Cranley Onslow: May I take the Secretary of State back to the important point about the reason for the Russians spending so much money on arms? Will he tell the House at what point in time this decision to spend so much more was arrived at, why the Russians took the decision, and why they have not revised it since?
  Mr. Mulley: It is quite impossible, as Sir Winston Churchill once said, to give clear answers to why the Russians react in particular circumstances. Let me give some facts and figures that will be unpleasant to the Conservatives, because they are not prepared to take defence seriously and to listen to the facts on which argument should be based. Some members of the Opposition think that we are quite capable of defending ourselves totally alone against the whole of the world. I sense that from the noise made by the Opposition rather than their actual words.
  Let me briefly give some facts and figures to demonstrate how significant the British contribution is. We keep an Army of four divisions in Germany, with a peace-time strength of 55,000 men which can be doubled quickly in an emergency. In addition, RAF Germany deploys a balanced force of strike, offensive support, air defence and reconnaissance aircraft.
  NATO relies on the Royal Navy and the Royal Air Force to provide the main weight of maritime forces in the Eastern Atlantic and Channel areas. Our contribution here numbers over 100 ships and some 26 squadrons of fixed-wing aircraft and helicopters. Alone among the European members of NATO we operate nuclear-powered fleet submarines—the capital ships of the present day—nine of which are now in service. We are also the only European Power to contribute strategic and theatre nuclear forces to the Alliance's general deterrent.
  These forces must be equipped with modern equipment if they are to remain effective against the improved Warsaw Pact equipment now coming into service. This re-equipment is a costly but necessary programme to which we devote very substantial resources. For example, our anti-submarine forces are being kept up-
  1452
  to-date with two new anti-submarine through-deck cruisers under construction, more nuclear-powered submarines and improvements to the Nimrod maritime patrol force.
  Mr. Brotherton rose——
  Mr. Mulley: No, I will not give way. I made that mistake before.
  The Army is greatly enhancing its anti-aircraft and anti-armour capability with the entry into service of Rapier and Blowpipe, the procurement of Milan, and improvements in the Chieftain tank.
  Several Hon. Members rose——
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. It is obvious that the right hon. Gentleman is not giving way.
  Mr. Mulley: The Royal Air Force has the new Jaguar and is procuring the Tornado multi-rôle combat aircraft. We hope to contribute also to a NATO programme for airborne early-warning aircraft, which will greatly increase the effectiveness of our air forces.
  Hon. Members: When will there be a decision?
  Mr. Mulley: We want to strengthen the cohesion of NATO, and we have made it quite clear that we wish to take a decision within the Alliance. No decision has yet been taken but I asked in December that a decision should be taken then. However, some of our allies wish the matter to be deferred.
  Mr. Eldon Griffiths: On the MRCA Tornado aircraft, I understand that there have been considerable difficulties with the undercarriage. As so much of our defence depends on this particular piece of equipment, will the Secretary of State give us some information about how the difficulties with the undercarriage on that particular aircraft will be dealt with?
  Mr. Mulley: The hon. Member is quite right—there have been difficulties, but I understand that the programme is now on time. My hon. Friend will deal with equipment matters when he replies to the debate.
  There is no question but that the British contribution to the Alliance is a major one in quantity and especially in

  1453
  quality. The British forces are all professionals. They are supported by some 300,000 civilians. Their value to the Alliance is substantial. This is why our allies have looked with concern at the cuts we have had to make in the defence budget—because we play so important a role in NATO's plans and state of readiness. They are, of course, also concerned that we should re-establish our economy on a sound basis.
  I turn now to the figures of defence expenditure, and I shall seek to put them into perspective and distinguish between fact and fiction. On the one hand, the Government are accused of cutting expenditure to a dangerous extent by the Conservatives while, on the other hand, some of my hon. Friends are inclined to argue that we have made no reductions of substance at all but have produced only paper economies. Obviously, as a matter of logic both views cannot be right. Yet, as is often the case, there is some truth and a lot of fiction on each side of the argument.
  When this Government took office, we inherited a defence programme of worldwide political and military commitments which was beyond the nation's means and over-stretched the capabilities of the Armed Forces themselves. Yet, despite having cut the defence budget three times in their last year of office in 1973, the previous Government left us a programme that involved an increase in defence expenditure by 22 per cent. in real terms above its 1974–75 level over a five-year period. Plainly, those who framed this programme had lost touch with reality. One of the first decisions of the Government was therefore to initiate a defence review with the aim of bringing our defence spending more into line with that of our major European allies while maintaining a modern and effective defence system.
  The effect of our decisions in the defence review and since, including the changes announced by the Chancellor on 15th December, has been to save a total of £8½ billion at 1976 Survey prices over the 1-year period ending in 1983–84. The release of resources on this scale must be recognised as a major contribution to our economic recovery.
  Mr. Alan Clark: The right hon. Gentleman referred to the increases in defence spending projected by the previous Government. They timed them almost exactly to coincide with what in his earlier evidence he attributed to the preplanning of the Soviet Union, which accounts for its considerable increases now. Does that not show considerable prescience on the part of the previous Government?
  Mr. Mulley: If the hon. Member will contain himself, I hope that I shall carry him with me when I describe in more detail the situation as it was in 1973 when the right hon. Member for Chesham and Amersham was in the Ministry of Defence.
  Mr. Michael Mates rose——
  Mr. Mulley: I will not give way.
  The savings, large as they are, have not had the disastrous effect on the defence programme so vociferously claimed by the Opposition, since the reductions have been matched by a corresponding reduction in commitments. Our contribution to NATO's central region remains as effective as ever before as a result of the defence review. Indeed, it was in this context that in a television interview Field-Marshal Carver made his much quoted remark, to which the hon. Member for Chesham and Amersham referred, of having reached "bedrock". We have not made cuts in this area since the review, and have no intention, in advance of mutual and balanced force reductions, of reducing the forces which are maintained in Germany in accordance with our Brussels Treaty obligations.
  Mr. E. Fernyhough: For 20 years or so I have been deeply concerned about the Brussels agreement, particularly with reference to the offset costs. In November we were told that serious negotiations were taking place. As these offset costs are costing us this year £600 million, are we to get the Germans to meet that bill, as we understood they would when the 1954 agreement was reached?
  Mr. Mulley: The conduct of these negotiations is not directly a matter for me, but as soon as there is a statement,

  1455
  I am sure that the House will be informed.
  The defence budget cuts announced in July and December last year amount to £200 million in 1977–78 and £230 million in 1978–79—12 per cent. of the total public expenditure cuts of £3½ billion then announced.
  As I understand the Opposition, they would have preferred us to make much larger cuts in public expenditure. Defence expenditure represents 10 per cent. of total public expenditure, and the £430 million represents 3·8 per cent. of the previous defence programmes for those two years. I hope that hon. Gentlemen will remember the figure of £430 million.
  I have been asked where the cuts will fall. We are still working on the final details for the next financial year 1977–78, but we expect that the savings will come as to between £60 million and £70 million from the works programme, and about £80 million within the equipment area by deferring planned expenditure on a range of items for all three Services, including an airborne early-warning aircraft on which a NATO decision has been delayed. The remainder—about £50 million—will be found by a combination of administrative and support economies.
  Mr. Kenneth Warren: The right hon. Gentleman mentioned that he was going to delay work on an airborne early-warning aircraft. Which solution does he favour—the British solution or the American solution to that requirement?
  Mr. Mulley: I say in short—and I hope to carry the Opposition with me in view of their proper concern about NATO—that I favour a NATO solution.
  I have already informed the Secretary-General of NATO, Dr. Luns, of the defence budget reductions. I told him that our aim would be to make the savings in a way that would keep to the absolute minimum the effect on our frontline contribution to the Alliance. For 1977–78 there is not enough time to consult the Alliance as fully as I should like, but we shall discuss the outcome of our study as soon as it is ready. For 1978–79 there is time to consult NATO fully, and I have undertaken to do so at an early and formative stage in our study of the measures required. We are most anxious
  1456
  to have the views of our allies and to work closely with them in every way.
  Mr. Neville Trotter rose——
  Mr. Mulley: I cannot give way to hon. Gentlemen at the end of every paragraph. If I do so, I shall never get to the end of my speech.
  One of the consequences of cuts in defence expenditure which worries hon. Members in all parts of the House is that for employment, especially at this time when unemployment is our most pressing and serious national problem. Almost all our expenditure represents jobs—directly in the Armed Services, or for civilians employed by the Ministry, or job opportunities in industry, especially in the aerospace, shipbuilding and construction industries. Therefore, any reductions must mean loss of employment prospects—roughly at the rate of one job for every £10,000.
  The right hon. Member for Chesham and Amersham and I know other right hon. and hon. Members on both sides of the House have been concerned about the representations made to my right hon. Friend the Prime Minister on these questions by the Chiefs of Staff and the wide and usually inaccurate publicity given to this meeting. I should like to make one point absolutely clear: there is nothing new or unprecedented in the Chiefs of Staff exercising their formal right of access to the Prime Minister. In recent years, this has happened on several occasions—in 1965, 1968 and 1970.
  The Chiefs of Staff are invited to be in attendance at Ministerial discussions of defence matters, as the nature of the business requires, as, for example, in the preparation of annual estimates and the defence White Paper. I, of course, kept the Chiefs of Staff fully informed as discussions proceeded, and the Prime Minister readily agreed to meet them to hear their views at first hand.
  As is the case with expert advice given to Ministers by their advisers in other fields, the advice which the Chiefs of Staff give to Ministers is, of course, confidential and in the defence field there is the additional problem of security considerations, affecting not only ourselves but our allies and NATO itself. Subject to these unavoidable restrictions, I am anxious for the fullest information to be

  1457
  made available and for the maximum amount of informed parliamentary and public discussion to take place.
  Mr. John P. Mackintosh: I hope that before my right hon. Friend leaves this point he will tell us the broad lines of the worries of the Chiefs of Staff. My hon. Friends below the Gangway say that the Chiefs of Staff always have worries, but so has everyone who is running a service. We listen to the educationists and the health experts and so on, and we are also entitled to hear the views of the people who are chiefly concerned with our defence services. We do not want to hear any secrets. We want simply the import of their worries and to know why the Government believe that those worries are unrealistic.
  Mr. Mulley: My hon. Friend is right when he says that there is a difficulty about defence. Expert advisers in other Departments that I have served—in education and transport—also do not make their views public, but of course in each of these areas there are many people who are not subject to any restriction and who put the case very persuasively, I am sure the House will agree, for more expenditure on their particular interests. The Chiefs of Staff are no exception to that.
  They naturally would like more money spent on defence and they can make a strong case in military terms for doing so. But, as successive Supreme Allied Commanders Europe have made clear, their job is to advise Ministers on the military capability of the Warsaw Pact, and they must accept the political decisions being made by Ministers and Parliament. That is the position in this case.
  Mr. Ian Gilmour: Will the right hon. Gentleman tell the House what he meant when he said that the Chiefs of Staff could speak for themselves?
  Mr. Mulley: Perhaps the right hon. Gentleman never made an ill-considered remark in reply to a supplementary question. He will recall that I was reprimanded by the hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) at the time when I said that. Clearly, one accepts the position of the Chiefs of Staff. What I had in mind was
  1458
  that it was important that the Chiefs of Staff spoke for themselves directly to the Prime Minister. They are entitled, because of their special position, to have this right of access.
  Rear-Admiral Morgan-Giles: I am grateful for what the right hon. Gentleman has just said. Of course, we all appreciate the difficulty facing any Government in their relations with the Chiefs of Staff and how much can be made public. But does not the Secretary of State think that it would contribute to the serious debate in the House today on what is a serious situation if he would answer in broad terms the question put by his hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh)?
  Mr. Mulley: I have done my best to do that. I shall be very happy to consider any ways of making more information available, but the hon. and gallant Gentleman reprimanded me for suggesting that the Chiefs of Staff should make a public statement. I am sure that he would not expect me to put them in an embarrassing position by saying exactly what their position is, but any question of our defences being dramatically below the level needed for the safety of the West is complete nonsense.
  Mr. Emlyn Hooson rose——
  Mr. Mulley: If I am allowed to continue, I shall give figures to support what I have just said.
  Mr. Hooson: If the right hon. Gentleman cannot tell the House what advice the Chiefs of Staff gave to the Prime Minister, can we take it that whatever advice they gave was rejected by the Government on political grounds?
  Mr. Mulley: It would be very unusual to say. I would be tempted to quote what was said by Mr. Goschen to the Duke of Devonshire on these matters. It was much ruder than anything I would say about defence advisers. Military people, like educationists and doctors in their respective fields, can all make very strong cases for additional expenditure, and are very disappointed if planned expenditure is not carried out.
  Mr. Mates rose——
  Mr. Mulley: I must get on. I have already given way several times. To sum up, in the next two financial years——
  Mr. Mates rose——
  The Deputy Speaker: Did I hear the Minister say that he was giving way to the hon. Gentleman?
  Mr. Mulley: I will give way.
  Mr. Mates: I am very grateful to the Minister for giving way. I realise that he has been interrupted in his flow. He said a moment ago that the Supreme Allied Commander had said that it was a political decision—that the level of forces should be decided politically, according to the strength of the Warsaw Pact. Earlier he said that the Government's policy was to adjust the level of our defence spending according to the level of the defence spending of our allies. What do the Government think is right?
  Mr. Tom Litterick: My right hon. Friend did not say either.
  Mr. Mates: The right hon. Gentleman said both. Do the Government think that we should base our defence policy on that of our allies, or that our posture should be decided on the basis of the threat from our enemies?
  Mr. Mulley: I said neither of those things. I hope that Opposition Members will not seek to inject their speeches into mine. It is unfair to hon. Members on both sides to do that. I said neither of the things which the hon. Gentleman was trying to attribute to me, as he will see from Hansard.
  In the next two financial years, in real terms at 1976 survey prices the defence budget will be of the same order of magnitude as in 1973–74 and 1974–75 —between £5,400 million and £5,500 million—although less than in the period 1975–77, when it was at an annual rate in excess of £5,600 million.
  Our slow economic growth has meant that while we spend less on defence than France and Germany we still spend a higher proportion of gross national product than they do. As our economy recovers, as a result of the measures that we have taken, we shall be able to make a greater contribution to the Alliance
  1460
  while maintaining our aim of bringing defence expenditure as a percentage of GNP more into line with that of our major European allies.
  Mr. Nicholas Fairbairn rose——
  Mr. Mulley: I have already referred to the three cuts made in 1973 by the previous Government, totalling £250 million, which at 1976 Survey prices—the basis of the current figures—amount to £439 million. They thus cut in one year from a lower total a bigger sum than our post-defence review reductions over two years.
  Although I was not aware of the 1973 secret intelligence reports, the increase in Warsaw Pact military strength and of Soviet technological capability must have been developing over a number of years and must then have been known. The right hon. Member for Chesham and Amersham was in the Ministry of Defence at the time. He did not resign. On the contrary, he was promoted after the cuts to be Secretary of State. Nor do I recall Opposition Members noisily shouting that the security of the nation was at risk or that NATO was threatened.
  I do not question the sincerity or integrity of the right hon. Gentleman in deciding in 1973 that wider national, economic and public expenditure considerations demanded a reduction in planned defence expenditure. I hope that he and his right hon. and hon. Friends will acknowledge that similar considerations may apply in present circumstances, particularly since the cuts are smaller in both real and relative terms.
  Mr. Ian Gilmour: The Minister will remember that during the last Government my hon. Friends and I were continually criticised by Labour Members for spending too much on defence. The Minister should make up his mind: Did we spend too much or too little?
  Secondly the right hon. Gentleman knows perfectly well that the reason why there were no cries from the Conservative Benches that our security was in danger was that it was not in danger then. The right hon. Gentleman does not seem to realise that if we cut something it meant that there was less for him to cut, not more.

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  Thirdly, will not the right hon. Gentleman accept—because it is undeniable—that we left the forces of this country in far better shape than we found them, and in much better shape than they are now.
  Mr. Mulley: I do not agree with either of those last two propositions. I ask the right hon. Gentleman to reflect on the phrase "bedrock—QED" which he used in his speech. If we are cutting below bedrock, they were a long way below bedrock in 1973, because in real terms the level of expenditure was less, and everyone knew that the strength——. The right hon. Gentleman smiles, but I suggest that his speech today was made for purely political effect, and that he did not believe in it.
  Mr. Fairbairn: I have been trying to think up a simple question which I hope the Minister can answer. It is as follows. If the right hon. Gentleman accepts that there is no risk of NATO's attacking Russia or any of the other Warsaw Pact countries, and if he does not think that they are likely to attack us, or to want to do so, what on earth does he think they want their great build-up of forces in the West for?
  Mr. Mulley: The hon. and learned Gentleman's views might find favour with some of my hon. Friends. The purpose of the forces on each side is to deter the other side from attack, just as at school the children who are less likely to return aggression are more likely to be subjected to it.
  The record of Tory Governments in office is usually very different from their promises and protestations in opposition. This applies in defence policy as in many other issues. There is no reason to suggest that another Tory Government would be any better than the last. Indeed, I should be very interested to see the results of a secret ballot of Tory Members on this proposition.
  Like the right hon. Member for Chesham and Amersham, I have spent much of my speech talking about money and policies. But we must not forget that effective defence depends on people. Despite our other differences of view, I am sure that hon. Members on all sides of the House will join me in paying
  1462
  tribute to the high standards maintained by the men and women of all three Services.
  Since I took up my present responsibilities in September, I have taken every opportunity to visit units and establishments of all three Services. I have been immensely impressed by their enthusiasm, efficiency and high morale. Standards are even higher than when I was last a Defence Minister 12 years ago. I have seen the magnificent job that the Army is doing in Northern Ireland in extremely difficult circumstances.
  I should like to join with the right hon. Member for Chesham and Amersham in paying tribute to the work that the security forces in Northern Ireland have done over the last year. It has not been an easy time for them, as the tragic casualty figures show, but we can look back on a year of solid achievement in the fight against terrorism. This has been marked in particular by the increasingly successful partnership between the RUC and the armed Services, including of course, the vital contribution made by the men and women of the Ulster Defence Regiment.
  This year is only two weeks old, but already there have been serious attacks on the security forces, resulting, sadly, in the death of three soldiers. I am sure that the House would wish to join me in expressing sympathy for the families of those who died. These attacks serve only to increase the determination of the Services, which know that the work they do in support of the police is a vital contribution to the achievement of a peaceful and secure future for the people of Northern Ireland.
  With the extension of our fishery limits to 200 miles on 1st January, the Royal Navy and the Royal Air Force, together with the DAFS Fishery Protection Service, assume responsibility for policing some 275,000 square miles of sea. Three RN frigates and four RAF Nimrod aircraft are currently assigned to the task full time, in addition to the Fishery Protection Squadron. During this period the frigates will be relieved by patrol vessels of the Island class. The full resources of the Royal Navy and the RAF will continue to be available to assist in fishery protection if required.
  Mr. Brotherton: Will the Secretary of State give way?
  Mr. Mulley: So far we have only two weeks' experience of the new regime, but these policing arrangements appear to be working well. Forty-two boardings have been made and three trawlers have been warned for fishing illegally.
  Mr. Brotherton: Will the right hon. Gentleman give way?
  Mr. Deputy Speaker: Order. I must ask the hon. Member for Louth (Mr. Brotherton) to contain himself.
  Mr. Mulley: I have already given way to the hon. Gentleman, with little reward to myself or anyone else.
  The quality of our Armed Forces is demonstrated daily, not just in these two operations, but elsewhere in Europe where we share with our allies responsibility for the defence of Western Europe. The courage and professional competence of our Service men are second to none and although our economic circumstances require that we reduce our planned defence expenditure over the next two years, our forces will still make a substantial and valued contribution to NATO. It is the Government's intention that they should continue to do so.
  I believe, therefore, that we are proceeding on the right lines in the best interests of the nation in present circumstances. This debate is essentially about the choice between the Government's defence policy and that proposed by the Opposition, with all its irresponsibility and unsubstantiated allegations. I ask tall my right hon. and hon. Friends to reject the Conservative policy by voting against the motion.
  Sir John Hall: On a point of order, Mr. Deputy Speaker. In the light of the speech we have just heard, would I be in order in asking leave to move a further amendment to reduce the salary of the Secretary of State to £1?
  Mr. Deputy Speaker: No.
  4.56 p.m.
  Mr. J. Enoch Powell: Almost at the end of his speech, the Secretary of State referred to the Province of this country in which I have the honour to represent a constituency. Certainly no hon. Member for a Northern Ireland constituency could approach any proposals or decisions regarding the Armed Forces
  1464
  without inevitably thinking first of the possible impact on Northern Ireland.
  My colleagues and I acknowledge that in handling the civil portion of the decisions announced by the Chancellor of the Exchequer before Christmas the Government took particular account of the special circumstances of Northern Ireland and tempered the wind in their application to the Province. We look to the Government to ensure that on the military side also the special circumstances in Northern Ireland are taken into account in considering the impact upon employment and the economy generally.
  I can offer one positive suggestion if the Secretary of State is looking for increased efficiency and savings from that quarter. We have welcomed the decision to increase the full-time element of the UDR, to which the right hon. Gentleman paid tribute, but have been disappointed by the rate at which that decision, which was announced many months ago, has been implemented. I think the Secretary of State will find that a considerable redistribution of the load and a considerable genuine economy could be made in Northern Ireland when a larger rôle can be discharged by the UDR in the very areas and for the very purposes for which it is designed.
  The UDR cannot discharge that rôle fully unless its full-time element is considerably larger than at present. The Secretary of State will be serving his own budgetary purposes as well as increasing the efficiency of the security forces in Northern Ireland if he will accelerate and pay special attention to increasing the full-time element in the UDR.
  My colleagues and I have often felt that debates are particularly unsatisfactory when they are in reality motions of censure upon the Government and turn upon major matters of policy but yet the wording of the motions before the House gives no indication—and is designed to give no indication—of the alternatives between which a decision is intended. Certainly the motion that is being technically debated this afternoon is no exception.
  I should be the first to admit that the prospect of halving the salary of the Secretary of State or of any other Minister is an appetising one; and I must tell the right hon. Gentleman that, if he were dependent for the maintenance of his

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  salary upon his performance at the Dispatch Box, one would have fears after this afternoon for its size in the coming months. Nevertheless, it is not good enough for us to be debating crucial matters of defence without having before us on the Order Paper, even in outline—here I disagree with what were almost the concluding words of the right hon. Gentleman—the alternative proposition that is being presented to us.
  On a Supply Day, when the subject is chosen by Her Majesty's Opposition, the Order Paper is free. There is nothing to prevent—indeed, there is every reason in favour of it—Her Majesty's Opposition from placing upon the Order Paper an outline of their own intentions and of what would be their alternative proposals, so as to test the feeling of the House and enable the House to address itself to a genuine question.
  Mr. Ian Gilmour: The right hon. Gentleman must know that the Government can always table an amendment to a motion that is put forward by the Opposition. Therefore, there would not be an opportunity to test the opinion of the House.
  Mr. Powell: I think that the right hon. Gentleman has mistaken me. I am not complaining that the House is not in possession of the Government's views and arguments. I am complaining that neither the Order Paper nor, if I may say so, the right hon. Member for Chesham and Amersham (Mr. Gilmour) has placed the House in possession of the other arm of the argument.
  The right hon. Gentleman emphasised in considerable detail the growth in Russian strength. He referred to a 48 per cent. increase in one branch of Soviet arms and a large increase in another. I waited on tenterhooks to hear him draw the conclusion that there should be a proportionate increase in those arms in our own forces. I am most anxious to be fair to the right hon. Gentleman, and I did detect five words—namely "We shall strengthen our forces". I accept that the right hon. Gentleman said that. It was the one indication in the whole of his speech of the intentions of Her Majesty's Opposition. Year after year the whole course of these debates has been that as each instalment of cuts of prospective
  1466
  expenditure—the hon. Member for Salford, East (Mr. Allaun) has a strong case; it is only prospective expenditure—has come along, the proposal has been opposed by Her Majesty's Opposition; but the next time there has been no question of reverting to the previous level or to the level before that.
  If there were a sort of Dunning motion before the House that the size and effectiveness of our Armed Forces has diminished, is diminishing and ought to be increased, there would be something to which the House could direct its attention. However, even that would be unsatisfactory, because it is surely not a question of balancing and arguing about percentage increases and reductions of total defence expenditure. I submit that we should be contributing on the Floor of the House different views about the balance between the component parts of the forces, the rate at which the different parts of the forces are being developed, and the whole thinking that underlies the structure of the forces——
  Rear-Admiral Morgan-Giles: Will the right hon. Gentleman give way?
  Mr. Powell: I shall give way to my old colleague in these matters in a moment—for, as has been said this afternoon, it is those matters and those decisions now that determine what will be the size and effectiveness of our forces 10 and 15 years ahead.
  Rear-Admiral Morgan-Giles: I think back to the time when the right hon. Gentleman and I were colleagues on our party's Defence Committee. He will remember, when he was chairman of the committee, setting up a sub-committee to examine the future of the forces. The right hon. Gentleman will remember that the committee's report ran into the sand and was never produced in the House by him or anyone else.
  Mr. Powell: I am grateful to my hon. and gallant Friend for reminding me of the work that we did together. Whether I was still in a position on the Front Bench to offer up the results of the work that we did together I cannot at this moment recall; for I can never remember exactly where April 1968 fell in the course of events. But generally my hon. and gallant Friend is quite right: it is easy for groups of Members and

  1467
  individuals to work actively on various aspects of the Armed Forces and endeavour to produce some underlying philosophy by which the proposals of Governments may be judged, yet he and I know very well how fatally great is the temptation, against which I am protesting, for the Opposition to take refuge in generality and, as the Opposition have done today, in mere formality.
  There is an unbridgeable gap between the commitments, to which the Secretary of State appealed, and the threat, which was frequently referred to by the right hon. Member for Chesham and Amersham, on the one hand, and on the other hand the specific forces which it is deduced from those commitments and that threat ought to be maintained in peace.
  Perhaps the House will bear with me for a moment while I illustrate the nature of the gap from a matter of personal recollection. In 1941–42 I was in charge, so to speak, of the threat to the Middle East which would result from a German attack upon Turkey. I very soon became aware of the enormous range of hypotheses that might be applied in estimating the size and timing of that threat.
  For almost all of 1941–42 we were engaged in a life-and-death struggle on the Western Desert Front, and rightly or wrongly, I conceived it to be my duty not to exaggerate anything that might divert the attention or the forces of the High Command from that crucial struggle. Your heart would be melted, Mr. Deputy Speaker, if you were able to contemplate the almost insurmountable difficulties in fighting their way across the Anatolian plateau with which I confronted any German forces that might have crossed the Bosphorus and be heading for the Middle East. They were slowed up almost to a standstill. However, when things changed at the end of 1942, when the prospect in the Middle East altered, what a change came over the capabilities of German forces attacking the Middle East through Anatolia! Difficulties that had previously been all but insurmountable virtually disappeared. Capabilities of railways and the speed and capacity of trains all altered. I do not say that it happened overnight; but it happened over a very short period.
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  The deduction which I draw is that in the last resort these are political and not military decisions. The step between establishing a commitment in terms of an alliance or establishing a threat in terms of the armed forces of countries that may be our enemies and deciding upon what forces this country should maintain in time of peace is essentially a political and not a military step. It will be found quite impracticable to say that £100 million, £300 million or £500 million more or less upon the defence budget means that the threat cannot he met or that the commitments cannot be fulfilled. What we are doing, and what the Government are doing, when we consider the size, composition and preparation of our Armed Forces in peace is in reality something quite different. It is nothing more nor less than deciding what sort of forces and what scale of forces are appropriate to a nation such as we are, situated and circumstanced as we are. I believe the only rational approach to the constitution of the Armed Forces of an island nation such as ours in time of peace is to recognise that.
  In a speech nearly two years ago, on 7th May 1975, I ventured to detain the House by endeavouring to set out in some detail how, from such a basis, a logical deduction might be made as to the shape and preparations, if not the absolute size, of the Armed Forces. I argued that, if we constituted our Armed Forces in that way, we should be in a position, without damaging their structure, to make adjustments according to the budgetary requirements of one year or another and moreover that the decisions of the Government would then be able to be criticised rationally by those who opposed them.
  I do not wish to repeat that speech this afternoon. I want only to draw attention—the Secretary of State gave me a lead in this direction—to a change that has taken place in the last few months, which is much more dramatic in its effect for the future than has yet been appreciated. I refer to the extension to 200 miles round these islands of the territorial waters of the United Kingdom. It is an act of State of profound importance, quite apart from the European Economic Community or the question of the common fisheries policy. We have deliberately made ourselves

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  responsible for the policing of that vast area of our own waters, as we claim them to be, around these islands in the context of fisheries. But we cannot stop there. We are responsible for the policing of those waters in every aspect by which the economy or safety of these islands may be affected.
  It is true that in the past—no doubt it would be true again—the decisive single naval engagements were fought at great distances from these islands. Yet the struggle which has been critical to our survival in war has been waged predominantly in, under and above those waters around these islands which we now claim exclusively as our own. We have in a sense entered into our own patrimony and rendered dramatic and tangible what has always been the prime responsibility of our national defence policy.
  I believe that in this change there can and ought to lie the inspiration to remould the shape and philosophy of our defence forces as a whole, to establish the primacy of the maritime element I include the air as well as the naval forces of all kinds—and to treat our domination over that air and sea area which is indisputably ours as the basis for thinking, for training, and for the military ambitions of our people.
  I do not believe that if we did that we should in any way be reducing the true effectiveness of our contribution to the Alliance which, so far as I know, both sides of the House necessarily support; for in the last resort, the impregnability. if we can make it so, of these islands to invasion and domination of their sea and air space could again in future, as it has several times been in the past, be the guarantee of the liberty and ultimate victory of our allies upon the continent of Europe. I think that we ought to be talking about those forces in much more detail and with much more pertinacity than we have seemed to succeed in doing in previous debates.
  In times gone by Governments have stood or fallen by their naval building programmes. The Secretary of State referred to the continuation of the development of our nuclear-powered submarine force, which he said rightly was the capital ship of the future. Undoubtedly it is the element which, if a single element alone can be decisive, would be decisive in
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  conferring that control over our insular environment to which I have been referring. So the rate at which our submarine forces are developed and the extent to which they, as against other branches of the Services, have claims upon the resources which are available ought to lie at the heart of these defence debates. I do not believe that we fulfil the responsibility which is placed upon us if, first, we rest content with the proposal and rebuttal of cuts in total terms, real or specious, or, secondly, confine ourselves to allegation and repudiation of percentage changes here or there.
  Historically, the greatest dangers which we have encountered in the past have been due to our inability to perceive in time fundamental military changes which have taken place. We have continued along the same tracks, maintaining forces of the same kind with roughly the same balance—a little more, a little less—and not been sufficiently alive to the changes in our own position and in the world around us.
  My speech this afternoon is intended as a protest against our falling again into this danger. I express the hope that we shall find a way, with the assistance of Her Majesty's Opposition——
  Mr. Eldon Griffiths: Before the right hon. Gentleman concludes——
  Mr. Powell: I was concluding. I am sure we all hope that the hon. Member for Bury St. Edmunds (Mr. Griffiths) will have an opportunity to participate in the debate. Now that he has punctured my last sentence, I shall not try to recover it. I shall sit down.
  5.17 p.m.
  Mr. Alan Lee Williams: I congratulate the right hon. Member for Down, South (Mr. Powell) on introducing a constructive spirit into the debate. As the debate wore on I was frightened that it would soon degenerate into the kind of debate that the right hon. Member for Down, South was criticising, particularly in view of some of the interventions that were made in the speech of my right hon. Friend the Secretary of State.
  In a previous defence debate, the hon. Member for Aldershot (Mr. Critchley) said that he thought that we were witnessing "disarmament by inflation". It was a striking phrase. However, I do not

  1471
  think that is the explanation, because in many respects these matters are indexed. I think that we are witnessing disaramament by the cost of technology. That aspect is causing the greatest concern. That is why I have tried in the past to draw attention to some of the priorities in terms of equipment.
  When considering equipment, one is forced, like it or not, to look at strategy and the whole approach to defence. The right hon. Member for Chesham and Amersham (Mr. Gilmour) said that the Opposition, should they become the Government, would increase defence expenditure. Whether that means increasing it by 10 per cent. or 15 per cent, he did not let us know. If it is 15 per cent, it means, perhaps, seven extra frigates or 20 extra aircraft.
  Is that the right choice, in terms of value for money? As we are now faced with another cut-back in defence expenditure, has the time come to have a fundamental review of the weapons systems which the Chiefs of Staff are recommending to my right hon. Friend?
  I think that the time has come for a serious reappraisal of the rôle of the Royal Air Force. I served in the RAF and am a great admirer of the Service. I know that it plays an important part in our defence arrangements. That is not in question. But when one examines the cost of modern aircraft one is bound to ask what vital equipment other parts of the Armed Services are giving up, or at least having in fewer numbers.
  Since the Royal Air Force has given up its strategic rôle—and nobody denies that it has, least of all the Air Force—it has become a basically tactical force. It does have a strategic capability but its rôle is primarily that of a tactical force in aid of the Army in the forward positions of NATO.
  The time has come to split defence in two broad ways. This proposal was examined during the 1974 fundamental review but it was rejected. I want to resurrect the idea of splitting defence into land/air and sea/air. I find it absurd that the Royal Navy is being forced to take on extra responsibility as a result of the 200-mile limit without the necessary air cover. One might also question the Navy's priorities in terms of the big ship concept. There is a strong
  1472
  case for producing more smaller ships and equipping them with missiles and the technology to deal with bigger ships.
  Mr. Trotter: Is the hon. Member aware that this winter the Navy had only one large ship in operation? We already have a Navy of destroyers and frigates.
  Mr. Williams: I do not totally agree. My remarks are directed towards the long term.
  I know that the Secretary of State is faced with the problem of making £300 million worth of cuts, over two years, on the existing forces. It is up to all of us to try to contribute towards a solution to that problem.
  I have done some work to see if there could be a saving by merging the Army and the Air Force in Germany. It is difficult for hon. Members to obtain accurate figures, and no doubt the ministerial team will question some of my figures. So far as I can see, the RAF, in terms of equipment and procurement, has between 31 per cent. and 36 per cent. —probably nearer 31 per cent.—of the total overall defence budget. That represents about one-third of the budget. I cannot believe that that is right. In the short term it would be possible to make some savings, but, as in most mergers, the economies expected do not always come to pass.
  When discussing mergers many people refer to local government reorganisation, which resulted in more money being spent. I am not advocating, for the short term—although I do for the long term—that such a merger should be complete. But the present tail needs to be examined. If one has four people to deal with every Service problem it surely would be better if there were only three persons to do so. I hope that my right hon. Friend will address himself to that simple proposition. I hope that he will not totally dismiss it, because it might be worthy of further examination.
  When opening the debate for the Opposition the right hon. Member for Chesham and Amersham criticised the Secretary of State for Defence and claimed that his assessments of the Chiefs of Staff's advice to the Prime Minister was puny. I am not sure of the right hon. Gentleman's exact words.
  Mr. Ian Gilmour: I did not say that.
  Mr. Williams: If I misrepresent the right hon. Gentleman I willingly withdraw.
  The time has come to resurrect the independent review body which the present Chancellor of the Exchequer set up when he was Secretary of State for Defence. The body was composed of independent experts who evaluated advice from the Chiefs of Staff if there were disagreement. The carrier dispute is one example of disagreement among Chiefs of Staff, and I think there was also disagreement over the TSR2. The Government should consider resurrecting this independent review body, which, unfortunately, was abolished by the Opposition when they were in government last time.
  Mr. Anthony Kershaw: In his calculations about mergers, and so on, does the hon. Member consider that any arm of the Services except the Royal Air Force could provide us with protection in the oceans to the north and west of us?
  Mr. Williams: I want to develop my case. A split in the way I suggest would cover that point. I am addressing myself to a more serious issue and I know that I am open to question on some of the detail of the proposition that I am making. I address myself to the important issue of the evaluation of advice from Chiefs of Staff. It would be best handled in the manner I suggest, thus enabling the Secretary of State to have a second opinion.
  A number of hon. Members are finding themselves in a difficult position tonight. not only because of past speeches—and I have delivered my share——
  Mr. Bernard Conlan: My hon. Friend knows that I agree with his general approach to defence, but before he leaves the question of mergers and amalgamations in the Services will he please comment on the Canadian experience? The Canadians were in favour of amalgamation of all Services, but they are now moving away from that idea.
  Mr. Williams: I do not recommend anything like the Canadian proposal, which involved the whole of the three Services. I am in favour of seeing how two Services can be merged on an experimental basis in Germany.
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  I am in a difficult situation, because I have always taken the view that defence must have priority in terms of overall expenditure because it is of fundamental importance to the security of the nation. Since the end of the war Labour Governments have always given priority to our commitment to NATO. The right hon. Member for Amersham was right to refer to the role of Ernest Bevin in an earlier Labour Government who exercised sound judgment in the formation of the Atlantic Alliance.
  My quarrel is not with the Government. I understand their position. They are under immense pressure from a number of my hon. Friends below the Gangway who have outlined their views on numerous occasions and have an amendment on the Order Paper tonight. I must say to them, as I have said previously, that if we were to accept their advice it would imperil the future of this country and endanger the very objectives that I know they have in mind—mutual balanced force reductions, and reaching an accommodation with the Soviet Union. Yet in spite of this and in spite of the cuts that the Government have made over the years, my hon. Friends still ask for more.
  In those circumstances it is very difficult for those of us who take a more plural view always to make our position absolutely clear. I cannot, in any circumstances. subscribe to the view that the alternative policy that the Opposition have put forward is in any way superior to my own Government's view. In fact, the vagueness of the Opposition's proposals makes them extremely suspect.
  Therefore, I am looking very much towards my own Front Bench for real, solid reassurances that the present Labour Government, who I am proud to support, gives top priority to NATO and will resist any encroachments in the future which imperil this nation's contribution to NATO.
  5.32 p.m.
  Sir Frederic Bennett: Although during the last two speeches a number of important propositions and appraisals have been made, we seem to have gone astray a little from what I would call the fundamentals of the debate today—that is basically, in my appreciation at least, whether the latest round of

  1475
  cuts suggested have put us into a dangerous position or have endangered our security. That is a matter on which we must all make up our individual minds.
  My right hon. Friend the Member for Chesham and Amersham (Mr. Gilmour) mentioned not only the Chiefs of Staff—on which we failed to get any elucidation—but also the remarks of the present Secretary of State's predecessor. It is quite clear—any layman would understand it as such—that last year, before these latest cuts were announced, he said that we had then reached the point at which if any further cuts were made our security would be endangered. I notice that the present Secretary of State, in his long speech, never once referred to that.
  My right hon. Friend also referred to one or two of the findings of the Sub-Committee on Defence and External Affairs, of which I have the privilege of being a member. As the Secretary of State did not mention it, whoever replies to the debate for the Government ought to deal fairly and squarely with the appraisals made by a Select Committee of the House, which after all represents absolutely equally both sides of the House and in which the findings have been absolutely unanimous. To summarise, they are to the effect that if any further cuts were made other than those already made—which had already caused us to reach danger point—we should be endangering the security of this country.
  Today, the Minister must either repudiate the findings of an all-party Select Committee or he must accept them. Leaving the Chiefs of Staff on one side, the Minister must also repudiate or accept what the previous Secretary of State said—that any further cuts would endanger our security. Was he speaking correctly then? Do the Government accept the position or do they say that he had no right or authority to make that statement at the time and that it was incorrect?
  There is a fundamental difference, which has not yet emerged in speeches today, between the two sides of the House on defence, or at least between the Conservative Party and the Labour Party. I believe that on balance it is fair to say about the Labour Party—moderates, the Tribune section and all the other sections—that its aim is to spend as little on defence as possible, as compared with
  1476
  social priorities which it regards as higher. I am not suggesting by any means that all members of the Labour Party wants to run down our defences to danger point, but it is a fair assumption to say that overall the Labour Party traditionally does not put the same priority on defence and security needs as does the Conservative Party, and that the Labour Party regards defence as simply one of a number of items of Government expenditure.
  That point is proved. Very often Conservative Members get teased from the Government side of the House. We are told "You Conservatives are always proposing cuts in Government expenditure, yet you propose increases in defence expenditure". I have always stood for that, and I repeat it today. Yes, we do place an entirely different priority on defence expenditure, different from all other forms of expenditure, for a very simple, fundamental and understandable reason, which is very easily understood by the public. That is that one cannot judge one's defence forces just by what one can afford. One must judge them by what forces are needed to safeguard this country's security. That is the starting point in our minds, and it should be the starting point in the minds of everyone else.
  Incidentally, when one travels abroad one finds that with other Governments of all political shades it is that standpoint from which they start, whether it be Israel or any other country. They say "What forces do we need to protect the security of our own country? Then we have to start thinking where we can find the money and men to provide it." That is not the theme of the Parliamentary Labour Party right across the board.
  During the recess I visited Australia. I have only just returned. It is an interesting fact that the new Liberal Government in Australia, taking over an economic situation just about as bad as that which we are enduring here, have nevertheless, while cutting Government expenditure right across the board, proposed and had accepted a 16 per cent. increase in defence expenditure.
  The interesting thing is that although there are very widespread criticisms of many of that Government's proposals at present from the defeated Labour Party, there has been virtually no criticism about the fact that the Australian Government

  1477
  have decided that at present the world is such a dangerous place that, economic hardship or not, defence needs must take a higher proportion of Government expenditure than hitherto. The same has happened in a number of other countries in varying degrees of economic development. Only here, in coming to a conclusion on our defence needs, do we say that we must expect that defence has to share the cuts along with all other Departments.
  Once and for all, I hope that the Opposition Front Bench will repudiate that notion. I was heartened when our Shadow Minister said today that we shall reverse the trend and shall spend more on defence. I hope that in winding up the debate the Opposition spokesman will spell it out and say not only that we shall reverse or halt the trend, but that we recognise that where security is needed there is a totally different priority. I hope that he will say that we shall judge our needs in future not by looking right across the board to see where a Chancellor can find this or that cut but by what is needed to maintain the security of this country.
  Shadow Ministers should start to say this now. I hope that it will be included in whatever election manifesto we put before the country, and in no uncertain terms. I would not mind if we lost votes over it, but I am fully confident that the general public share our philosophy on this matter and not the philosophy of the Labour Benches.
  We have had cuts under a Conservative Government. It is not altogether fair to say that none of us protested about them at the time, because some of us did. There has been a series of cuts since, however, and the process has now become a regular one. Whenever we are in economic difficulty, when the pound takes another lurch, when the IMF demands cuts, the Chancellor asks each Department how much of a reduction he can expect. The Armed Forces always have to bear their share.
  Where will this stop? If Ministers now say that, despite what has been said by the last Secretary of State, by NATO and by the Select Committee, they still believe that we have a credible defence, but only just, what will happen in the next economic crisis? Will
  1478
  the Chancellor then say again that every Department must pay its share? Will there be another percentage cut in the defence Forces' budget? As long as the present Government are in power, that is just what will happen. We shall have this debate all over again. We shall be told that, despite what the Chiefs of Staff and everyone else have said, we can still provide a credible security even after further cuts.
  Were that true, we should not need our present defence Forces. If in an economic crisis we can, without endangering our security, always make further cuts, I do not see how Ministers can justify our present level of defence expenditure against their own left wing.
  Mr. Litterick: I think that the House will easily follow the hon. Gentleman's argument, but is he not overstating it? Can he tell us factually the last year in which defence expenditure fell, in real terms? That would put his argument in perspective.
  Sir F. Bennett: I could not answer that question specifically, but I am glad that it has been asked because it proves the main theme of my speech. That is that I do not give a damn whether it has been raised or not raised in recent years. I do not judge this country's defence expenditure by whether it has been raised or lowered, but by what our prospective enemies are spending and how much we need to spend to match our defences against theirs. That is the test—not whether this or that party conference has advocated this or that reduction.
  So my view is that defence expenditure should be based not on proposals for reductions but on the needs of this country in the face of changing situations overseas.
  Mr. Eldon Griffiths: Before my hon. Friend sits down——
  Mr. Speaker: Order. I am afraid that the hon. Gentleman has sat down.
  Sir F. Bennett: I am sorry, Sir; I sat down to give way to my hon. Friend.
  Mr. Speaker: I am disappointed.
  Mr. Eldon Griffiths: I do not of course, Mr. Speaker, share your disappointment, because I am anxious to hear the rest of my hon. Friend's speech.

  1479
  May I attempt, through my hon. Friend, to answer the question of the hon. Member for Birmingham, Selly Oak (Mr. Litterick)? The proportion of our expenditure devoted to defence was reduced in real terms in 1934, 1935, 1936, and 1937. As a consequence, because we did not meet the manifest and increasing threat of the enemy at that time, we failed to prevent and came close to losing the war that was forced upon us.
  Sir F. Bennett: I agree with my hon. Friend. I think, Mr. Speaker, that your disappointment should be directed to some other hon. Member, because I was about to reach my conclusion.
  A Labour Government are always in the dilemma that they possess in their ranks, if they are to maintain any shadow of unity, those who do not want any credible defence forces at all because they do not want to remain part of the Western Alliance. They do not mind becoming a Finland; they do not mind being neutral in the global struggle. The Labour Government at this time have to embrace within their so-called defence of our defence needs the fact that, if they are to keep a number of their own colleagues happy, they must take a serious risk from time to time, and continue to do so, with the maintenance of this country's security.
  Mr. Speaker: Before I call the hon. Member for Salford, East (Mr. Allaun) to move his amendment, I should point out that the amendment will in no way limit the debate, so far as I am concerned. It will still be possible to discuss the proposition about the Secretary of State's salary.
  5.45 p.m.
  Mr. Frank Allaun: I beg to move to leave out from "That" to the end of the Question and to add instead thereof,
  'this House believes that arms expenditure should be reduced, not increased; notes that, far from the illusion that arms spending has been seriously reduced, there has been a real increase since 1974; welcomes the proposed cuts of 1½ per cent. next year, and 3 per cent. the following year, but considers these inadequate; asks the Government instead to carry out its election commitment to reduce the proportion of Great Britain's resources devoted to arms to that of the major European NATO powers; urges that the savings be devoted to housing, health, education, social services, overseas aid and the re-equipment of British industry; and further calls upon the Government to draw up immediate plans for
  1480
  the redeployment of workers and resources from arms production to socially useful purposes, along the lines of the suggestions made by the Lucas Aerospace Shop Stewards' Combine Committee and the Vickers Shop Stewards' Combine Committee.'
  The amendment has been signed by 50 of my hon. Friends. The signatures were obtained last night, when there was a very thin attendance on both sides of the House. If there had been the normal attendance, I can assure the House that there would have been 100 signatures—the same number as we have obtained on similar motions on previous occasions. If the amendment is defeated, all the signatories will vote solidly for the Government and against the Opposition's motion, because the Opposition want an increase in public expenditure on arms and we want a decrease.
  I should like to broaden the discussion a little by accusing the "Big Arms Spenders", in Parliament and the Press, of adding to the present risk of war. Some of their minds are filled with the idea of winning an East-West war. There will be no winners in World War III. The only victors will be the worms. The task of our generation is not to win such a war but to avoid it.
  Accelerating the arms race by either side is no deterrent.
  Sir Frederic Bennett: Tell the
  Russians.
  Mr. Allaun: I will. It increases tension and the war danger. Conversely, arms reduction lessens tension and improves the prospect of peace, whether it is done by East or by West.
  I am not fond of either the Soviet Government or the American Government, but I believe neither wants war because both are composed of relatively sane people. Yet each is so frightened of the other that they are both preparing for war. So the arms race gathers impetus, taking the human race nearer the precipice.
  Some politicians and Press lords daily try to curdle our blood with accounts of "overwhelming" Soviet might. I probably dislike military might more than they do, but I wish to point out that NATO exceeds the Warsaw Pact Powers in total annual expenditure, in Services manpower and in naval strength, according to American Government sources.

  1481
  The International Institute of Strategic Studies, which is hardly a Soviet body, stated this month that the military spending of NATO is "only" $17·7 billion—about £10 billion—a year greater than that of the Warsaw Pact powers. How much more powerful than they must we be? In any case, both sides already possess enough nuclears to wipe out every man, woman and child on the earth several times over. That is what I call overkill.
  Miss Janet Fookes: In that comparison, is account taken of the pay of the forces involved? I believe that the pay to the Soviet conscripts is very low indeed compared with what we and the Americans pay.
  Mr. Allaun: The pay of the Soviet forces is certainly lower than ours, as is the pay of the Germans, the French, the Belgians and those of all the other countries which have conscription, because conscription is a way of getting armed forces on the cheap. I hope that no one will return to that point.
  We in Britain just cannot afford to waste our resources on the present scale. What is the good of having military might if we have economic near-bankruptcy? Military might provides no defence. A dozen nuclear missiles landing on our country will decimate our people, and we could not prevent the arrival of these missiles if they were ever dispatched. So the spending of still more resources on arms is a waste. If there have to be cuts they should be, as the amendment says, in the arms programme and not in housing, health, education, social security, overseas aid and re-equipping industry.
  Mr. Alan Lee Williams: Would my hon. Friend care to speculate why the Soviet Union has such a heavy defence programme, and what are its intentions?
  Mr. Allaun: The Soviet Union has a large defence programme for precisely the same reason that America has a huge defence force. The Americans are considerably stronger than the Russians. As I have explained, that is because each country is frightened of the other.
  The cost of our military research and development, which is now £702 million a year, would provide an extra 70,000
  1482
  homes a year. If the British people were asked—as they were once in a Gallup Poll—how they would prefer the money to be spent, they would much prefer it to be spent on social development rather than arms. I can produce figures if required.
  Mr. Hooson: If the question were put in those terms, everyone would answer "Yes". Does the hon. Gentleman agree that if the consequences were put to the people, namely, that they might lose their liberty and be dominated by another country, they would not answer in the same way?
  Mr. Allaun: My reply is that it is difficult to defend oneself in a nuclear world because the only recourse is to drop nuclear weapons on another country and kill millions of equally innocent people.
  The Opposition motion is to halve the defence Minister's salary. The Opposition claim that the Government have already cut military expenditure by £8 billion. On this point I disagree with both Front Benches, although we shall support the Government if our amendment is defeated. The alleged cut of £8 billion is a fiction. It is a reduction not in current spending but in comparison with wild proposals for a colossal increase in arms expenditure over the next 10 years, as suggested by the Tory administration in 1973 in a different economic climate.
  It was asked earlier in the debate when the last cut was made in British defence spending. It was in 1953, under Winston Churchill, who made a more drastic proportionate cut than has been made at any time, with the exception of 1945.
  Mr. David Walder: I should like to get away from monetary expenditure and ask the hon. Gentleman whether, if the size of our Armed Forces were reduced by half tomorrow, he thinks there would be any reaction among the Warsaw Pact countries to that move.
  Mr. Allaun: Yes, I think that the reaction would be extremely encouraging from our country's point of view. Mr. Brezhnev, in a recent speech, undertook for any cut by the West to make a proportionate decrease in the East. That is a very sensible way of going about it.
  Talk about "further" cuts is nonsense. The arms bill has gone up, not down, in

  1483
  real terms. In the past three years there has been an increase in the annual arms bill in cash terms from £3·4 billion to £6·1 billion. Admittedly, inflation accounts for a large part of that, but not all of it. There was a real increase, in constant 1975 terms, of £200 million in a single year—1975–76.
  If we are to make real cuts in the arms programme, we must ensure that alternative work is provided for every worker who might otherwise become unemployed. That proposal is now being considered in depth by a high-powered committee of experts set up by the Labour Party meeting in this building. We ask the Government to start to plan this conversion immediately in the way in which the Labour Government successfully switched 9 million Service men and arms workers to civilian employment within 18 months in 1945.
  Engineering workers at factory and national union level are pressing for that. Shop stewards have come forward with valuable proposals for socially useful alternative work. Some aircraft workers, for example, stress that their facories and skills are particularly suited to produce the expensive and highly sophisticated machine tools—many of them electronically controlled—that we are at present buying from America, Germany, Switzerland and Italy.
  The shop stewards committees referred to in the amendment have also come forward with plans for the production of advanced medical equipment and with longer-term projects for battery-run cars, wave energy, solar heating and a hybrid road-rail vehicle with pneumatic tyres.
  5.57 p.m.
  Mr. Emlyn Hooson: The hon. Member for Salford, East (Mr. Allaun) speaks with great sincerity and puts his ideological viewpoint very firmly. When asked by an Opposition Member what would be the result if we reduced our defence expenditure by half, he said that the result would be extremely encouraging from our point of view. What if he is wrong? It behoves a country to be prudent in defence matters because if a major mistake is made in the calculation the result can be irremediable. That was almost so between 1934 and 1937, when the mistakes made by both sides of the House
  1484
  were based on political judgments. I agree with the right hon. Member for Down, South (Mr. Powell) that it is a political judgment and not a military assessment that is the ultimate test. We were so wrong in our political judgment as to make the position for our country and Western civilisation almost irremediable.
  The hon. Member for Salford, East was followed by the hon. Member for Torbay (Sir F. Bennett). In my experience defence debates are often dogged by ideological differences. The extreme Right of the Conservative Party has always been against any defence cuts. I remember its tremendous ideological adherence to the view that we should have a massive presence east of Suez when the country's position had been so changed in the world that on any detached view it was impossible to sustain it.
  We have from the left wing of the Labour Party the other ideological viewpoint. It wants to cut defence expenditure whenever it can, irrespective of the long-term defence interests of the country. One could argue, I suppose, that it is safer for a country to have no defence expenditure at all rather than ineffective defence expenditure. We should put ideologies aside and look at our country as it is today in a changed situation, facing a threat certainly from one direction and possibly from elsewhere, and ask ourselves what is the prudent course for us to take.
  When I listened to the Secretary of State, I could not help feeling that he was speaking with all the confidence of a Minister whose salary had actually been cut by half. It seemed to me that he paid the price beforehand, such was the conviction conveyed by his speech. I understand his feelings. He is a very intelligent man and he knows that there is a world of difference between defence cuts as a result of a considered review and arbitarary cuts such as those we are considering. That is why his heart was not in his speech. He had obviously been defeated in the Cabinet and had to come here to answer politically for a decision taken politically by the Cabinet as a whole. We understand his position, and perhaps we should not be too frightened about his salary.

  1485
  The essence of my defence philosophy is that the majority of our people do not want to take a real risk with the security of the country. They abhor war—the younger generation in particular see war as a dreadful thing in all its consequences—but equally they abhor the thought of the risk of losing their personal liberty and their way of life. They are aware that there are forces in the world which really believe in dictatorship, in the exercise of military power and might, not necessarily to attack a country but to bring such external pressure on it that it has to change its internal complexion. That is to me an unacceptable form of pressure that this country and the West should safeguard against.
  Mr. Cyril D. Townsend: It is rare that one hears a Liberal talking about defence. To make sure that we all understand the hon. and learned Gentleman, may I ask whether he is saying that the Liberal Party now believes that defence expenditure should be increased? Is it the Liberal policy to continue with the nuclear deterrent?
  Mr. Hooson: The hon. Gentleman obviously pays no attention to defence, otherwise he would know that the Liberal Party does not believe in increasing defence expenditure. But we think that if there are to be reductions they should be as a result of an overall review in the NATO context. The question of the independent nuclear deterrent is a matter that needs quite separate examination, and it is not the subject of this debate.
  I want to deal with the amendment. I can sympathise with the all-out pacifist view. I can understand that there are people who believe that there is no point in having defence of any kind. But we live in a world in which the majority of other people and those in control of other countries are by no means pacifist in their views and are willing to use, and intend by their political philosophy to use, armed force to achieve their ends and impose their will. Someone once said that freedom is like the air we breathe: we notice it only when it is absent. We have tended to take for granted much of our freedom, and I think that we must be aware that eternal vigilance is its only guarantee.
  Mr. Martin Flannery: I refute the point made by the hon. and learned Gentleman about pacifism. I agree with the amendment but I am not, never have been and never will be pacifist. I served in the Second World War, as did many Opposition Members. I do not want in any way to bow my head to anyone who would attack the country. I was one of those who framed the amendment. We framed it in such terms as to ensure the adequate defence of this country as we see that it should be defended, taking into account all the circumstances. I wish to refute categorically any accusation that there is pacifism in the amendment.
  Mr. Hooson: The hon. Gentleman has made his own position clear, but the position of others who have signed the amendment may be quite different. I am pointing out that total pacifism is a much more acceptable viewpoint than that of ineffective defence. If we are to have defence, it must be effective and not ineffective.
  There has been much discussion about the undoubted growth of the armed strength of the Soviet bloc forces and the relative decline of the West. I think that the most important element in the defence of the West is not necessarily the hardware but is really the morale and intellectual will of the West to continue to live, and live in its own way. That in itself is useless, however, unless one has the hardware to support the will. But I do not subscribe to the view which implies that if one believes in defence one always has to believe in additional armaments. That was the view put, in effect, by the hon. Member for Bexleyheath (Mr. Townsend) when he interrupted me just now.
  I much agree with the viewpoint, expressed by the right hon. Member for Down, South, that there has to be a constant reassessment of the kind of threat that is posed to the country. I agree with his assessment that probably we should be increasing our maritime capability in all its aspects and relying perhaps in a different way on our land forces.
  There have been vast changes in the 20 years in the position of the West. There have been inevitable changes in attitude. There has been less chauvinism in this country. A great deal of the Tory pressure in the past for excessive

  1487
  military expenditure was based on pure chauvinism. I do not say that the majority of the Tory Party would now subscribe to that view, but it was very characteristic of the debates in the House 13 or 14 years ago.
  I think that there is in the country and in the West generally a tendency to overstate our own shortcomings, to criticise and, indeed, to be hypercritical of our own country, and to underestimate and understate the shortcomings on the other side of the Iron Curtain. We have heard enough from Russian dissidents recently to know the severe penalties to the human spirit from living under a régime which believes in an iron dictatorship and in spreading the power and influence of that dictatorship through armed pressure without necessarily employing armed attack.
  Therefore, I think it is important that this country, in common with the other NATO countries, should constantly reassess the threat posed by the Soviet bloc. As there are changes in our attitudes, no doubt there are changes in the Soviet viewpoint. There is, however, one great distinction between the open democracies in the West and the way they work and the way in which the Soviet bloc works. One has the impression in the West of constant confusion and uncertainty, with no policy and short-term expedients being resorted to. We had such expedients in 1973—three cuts in defence expenditure by the Tory Government within seven months. That sort of thing happens in all the NATO countries. We have these constant shifts and changes.
  On the other hand, one has the impression that the Soviets came to a decision a long time ago and that they are following a definite defence policy, part of which includes detente—which means something different to the Russians from what it means to us. We should constantly review the situation. There is far too little co-ordination in the Western Alliance. There is far too little co-operation between its members and there is a great deal of duplication in defence expenditure. I have no doubt whatever that, with a proper national review and within the NATO Alliance, we could have much greater cost effectiveness in our defence. That is what we must aim for.
  1488
  In view of the constant changes in the West and the uncertainties and pressures that we have here today, the Russians are bound to ask whether the West has the will to resist or whether it will crumble internally when subjected to a great deal of external military pressure.
  It is dangerous to have arbitrary cuts such as those now proposed. Defence expenditure is of a different nature from other expenditure because it is irremediable, or remediable only at great cost. We need to have a constant and careful review.
  I do not think that we have sufficient debates on defence matters in this House. I think there should be a permanent Defence Committee that constantly considers defence implications. In a valuable speech, the hon. Member for Hornchurch (Mr. Williams) made various suggestions which should be examined in detail and, in particular, in committee at much greater depth than is possible in a debate of this kind.
  A major factor that must be considered is the effect of any cuts of this kind on the situation in Northern Ireland. Tribute has already been paid to the rôle of the Services in Northern Ireland, but we must also consider whether it is now seriously interfering with the training programme of the Army of the Rhine.
  We obviously need greater co-ordination of defence policies in the Western world, particularly in the light of changing circumstances. What is really needed in this country is a long, cool look at our defence policy. What is needed is a committee that constantly assesses changes. We should avoid short-term cuts in defence expenditure.
  I was defence spokesman for my party about 10 years ago and I recently resumed that responsibility. I have always generally been in favour of cutting defence for the reason that I see no point whatever in spending one penny more on defence than is absolutely necessary. Any sensible person would take that view. But when we have evidence—it is already clear—of a massive build-up of Soviet forces, I think that to make arbitrary cuts of this kind is entirely irresponsible.
  6.13 p.m.
  Mr. James Boyden: The hon. and learned Member for Montgomery (Mr. Hooson) is absolutely

  1489
  right about the need for a Parliamentary Defence Committee. I do not know what the hon. and learned Gentleman has been doing in the last few years, because the Expenditure Committee is just that. It is a pity that there is no Liberal representative on it.
  The right hon. Member for Down, South (Mr. Powell) has made the only defence contribution to this debate from the Opposition Benches so far. The right hon. Gentleman was absolutely right in his strictures on the right hon. Member for Chesham and Amersham (Mr. Gilmour) about the vagueness of his statement in relation to defence. The right hon. Member for Chesham and Amersham talked about the morale of the Services. That is always a Tory gambit when there is a Labour Government.
  I remember that from 1967 to 1970 the Tories were saying in every defence debate that morale in the regiments and squadrons was disappearing because we were running the defence of the country. I visited scores of military establishments and never found one word of truth in what was being said then. It is exactly the same story now. I shall be happy to give way to the right hon. Gentleman if he can point to a particular regiment, squadron or unit and say that morale has fallen.
  Mr. Ian Gilmour: I do not think it is right to mention particular units across the Floor of the House. But the name of one particular unit has been given to the Under-Secretary of State for Defence for the Royal Air Force and it was not denied. It was agreed that there were other units as well.
  Mr. Boyden: The largest number of troops are in Ireland or BAOR, and I would have thought that their morale was extremely good.
  It is absurd to take a figure and say that below that figure there is decay and disruption and that our forces are threatened. The right hon. Member for Down, South was absolutely right when he said that there is a considerable varition in the effect of cuts and the effect of the actual money devoted. It would have been much better if the right hon. Member for Chesham and Amersham had given specific examples with regard to
  1490
  equipment and manpower where the cuts would be damaging and would provoke a crisis.
  I want to confine my remarks to specific matters and refer to the Defence Committee of the Expenditure Committee, which has been working for a considerable time with regard to many matters. I particularly want to mention training. A report is now with the Committee, commissioned by my right hon. Friend the Member for Stockton (Mr. Rodgers) when he was Minister of State for Defence, and the report makes some valuable suggestions. On reading that report I felt that not enough energy was devoted in the Ministry to making the costs of training less while making it more effective.
  The actual cost of Service training in the current year is not far short of £500 million. It is approaching about 10 per cent. of the defence budget. Most training establishments have spare capacity In fact, there are some training establishments, such as in the Army, where it would be possible to have the same kind of training for the RAF in one particular area either by co-locating similar training units or, better still, evolving a common training policy.
  The actual organisation in the Ministry of Defence for looking at training is rather weak and suffers from the fact that those men of experience—the directors of training—have a strong vested interest in maintaining the training quantity and arrangement for their own particular Service. This was forcibly brought home to the Defence Committee when the directors of training came to the Committee to discuss this very subject. I was astonished to find that there are four Services—at least, there are four directors of training—because the Royal Marines have their own director of training. Though the directors are all good military people, they have an extremely complacent attitude about the need for common training and working together to see whether considerable economies can be made. I suggest that the Secretary of State should look at defence training programme and consider, in the light of the report, whether he should not make some changes.
  There are a number of administrative changes that the Secretary of State could

  1491
  make that would produce some economies almost at once. If my right hon. Friend decided that there should be cuts in the length of training in almost all courses, and left it to the directors of training to make suggestions regarding the cuts, I think he would get some astonishing results.
  For example, in the training of telegraphists, teleprinter operators and telephonists there are separate training establishments for each Service, but at the end of the day the work is almost entirely the same. The length of the basic course varies in each Service. One course lasts three weeks, one lasts four weeks and one lasts five weeks. Therefore, if pressure is applied, there can be rationalisation, and I should have thought that those whom I have mentioned could be trained on a common basis in a common establishment with a standardised length of course.
  The very fact that each Service has a different period of training for the same subject calls for some investigation, and the very fact that there are still situations of this description suggests that there has not been the concentration on training and training economies that there could have been.
  One economy that the Services have made is the arrangement whereby one Service trains for another—the agency arrangement. But, out of some 30,000 men under training at any given time, there are not more than 2,000 being trained on an agency basis, and the number of common Service establishments is very few. Some are very high-level. Others are not so high-level. But the very fact that both high-level training and what might be called low-level training are done on a common basis suggests that a great deal more could be done. Automatic data processing, work study, nuclear biology and chemical defence training are all done on a common basis. But almost all adventure training, which I venture to call low-level, including free-fall parachuting, mountaineering, gliding and sailing, is done on a joint basis.
  The Expenditure Committee felt that, for example, in catering, MT driving and MT mechanical maintenance, considerable economies could be made if there were common training. So far there have been reports and studies, but there
  1492
  has been no movement on the ground to produce the kind of training that would result in economies.
  To underline what I have been saying about telephonists, I cite the example of the training of dog handlers. It would not save a great deal on the defence budget, but the RAF and the Army train their dog handlers on different systems and in different places.
  Mr. Mates: To do different jobs.
  Mr. Boyden: I find that very difficult to understand.
  Mr. Mates: Of course the jobs are different. The RAF Regiment uses dog handlers for one specific task, namely, to guard airfields. I am sure that the hon. Gentleman is aware of the variety of tasks undertaken by Army dog handlers, especially in Northern Ireland, where they have a police rôle, a security rôle and a search and detection role. Their jobs are totally different.
  Mr. Boyden: But the end result, which is the way that the dog behaves after his training, does not seem all that different. The Army is proposing to rebuild its veterinary establishment at Melton Mowbray. I suggest that this would be a good opportunity to look at the problem. I suggest that training in dog handling is one area which might be put on to a common basis.
  In the illustrations I have given, I suggest that there is sufficient evidence of the need for a much more active investigation into the subject of common training not only along the lines of the Expenditure Committee but also in a much more thorough way. I hope that the Secretary of State will take this seriously. It could produce considerable economies. My right hon. Friend should call upon the Defence Training Committee to make a progress report on what it has in mind.
  The other matter to which I wanted to refer was touched upon by the hon. and learned Member for Montgomery. It is the scope in NATO for much greater cooperation and much greater efficiency from the use of the same money. For some time the Expenditure Committee has been studying the difficulties of the failure to have common operational machinery—for example, to get different national aircraft to operate from the same airfields. Such matters are relatively simple and raise no

  1493
  problems for the Warsaw Pact countries because their equipment all comes from the same source. But in the case of NATO we need a much greater effort by SACEUR and the NATO Secretariat with the individual nations. This has been on the cards for a long time. Western European Union has been hammering away at it. There is to be a conference at the beginning of March on this subject under the auspices of WEU. However, the need to bring pressure from the British angle is outstanding.
  Recently the Expenditure Committee discussed these matters with a number of Dutch Members of Parliament, and they made a number of very constructive suggestions for much closer integration between the Dutch and British forces. There are already very close naval connections, but a variety of suggestions were made which would be of considerable benefit and be economical.
  Earlier in the debate one of my hon. Friends spoke about the integration of the Army and the Royal Air Force, and another hon. Member intervened and put to him a question about the Canadian experiment. I hope that we shall not go along that line. I have met many Canadians over the years and I have spoken to many of their military people. There is no doubt that it has been almost a disaster for the Canadian forces. It has not been so very important. of course, because the role of the Canadian forces can fit in more to an integrated base than those of almost any other country. They play a prominent role in the United Nations, and their emphasis on integration of this kind is more appropriate there.
  When the Canadian integration scheme was brought into operation, there was a drastic reduction in the number of men in their Services, from 120,000 in 1964 to 82,000 in 1973, so that there was the most favourable opportunity to make a success of the experiment. The Canadians failed to make a success of it, and it would be a fatal mistake in producing integration, common purposes and common training for our Services to get rid of units which had proved to be a complete success over the years. I refer specifically to the regiment, the squadron and the ship. It would be difficult to get rid of the last of those,
  1494
  though perhaps the Opposition think that my colleagues have that in mind. When I went into the Army Department in 1967, however, I thought that there was a strong case for a corps of infantry. It did not take me very long and many visits to regiments to discover that the Army was right to have built up the traditions of the regiment. The same applies to the squadron in the Royal Air Force.
  What is more, although I have been stressing the need for common training, I do not agree with the directors of training or with those higher up in defence circles that it would weaken the spirit of the regiment or the squadron. In fact, I can see possibilities of improving field operations because people have been trained together and have grown up together in this way. I do not believe that my right hon. Friend the Secretary of State has any designs on the regiment. From my experience, I have no doubt that in the Army the regiment is the most efficient unit devised over the years. It is the envy of our NATO allies, and I am sure that there will be no interference with it.
  6.28 p.m.
  Mr. Julian Critchley: I believe that there are about 80 Government supporters in this House who are members of the Tribune Group. If my arithmetic is correct, some 45 Labour Members have signed the amendment. The Tribune Group is calling for a further cut over and above the cuts already announced—a cut amounting to an additional £1,000 million. That is well known.
  Mr. Litterick: To put the matter in its true perspective, it should be pointed out that it is the Labour Party which has made such a call. It made it in 1973, and it has repeated it every year since.
  Mr. Critchley: That reinforces what I was about to say, because I should like to know what are the motives behind the Tribune Group. What is it setting out to do? What are its motives? What sort of Britain does it want?
  I suspect that the members of the Tribune Group are the same people who were described rather unsympathetically by the late Hugh Gaitskell as
  "a collection of neutralists, unilateralists and fellow travellers."

  1495
  They are, in fact, mounting a threat to the sort of foreign policy and defence policy which the Labour Party has always stood for. They are advocating further cuts in defence, the size of which, if implemented, would make our contribution to the NATO Alliance useless and worthless.
  Everyone knows this, but what is so annoying is that these Tribune Group Members pretend to be radicals in favour of saving money of retrenchment, or moralists who are uniquely concerned with the wickedness of weapons. In fact, they are neither. They wish to make Britain a neutral nation, and it is curious that it should be the right wing of the Labour Party—the social democrats—who have failed in the intellectual battle of revealing precisely what the Tribunal Group wishes to achieve.
  The Tribune Group wants Britain to become neutral in the context of the East-West dispute. The group favours neutrality, either as an end in itself or as a first step towards Britain changing sides. The group's members fear and dislike the United States more than they do the Soviet Union.
  Mr. Litterick: Prove it! Those are assertions, just ignorant assertions.
  Mr. Critchley: The hon. Member will be jolly lucky if he listens to a speech in this place which contains only one assertion.
  Mr. Deputy Speaker: I have had occasion to look in the direction of the hon. Member for Birmingham, Selly Oak (Mr. Litterick) at other times. I hope he will remember that.
  Mr. Litterick: I shall try not to be provoked by any more ignorant assertions this evening, Mr. Deputy Speaker.
  Mr. Critchley: I should remind the hon. Member to read the publication which comes out weekly carrying the name of the group to which he belongs. Why, if the Tribune Group is hostile to capitalism in this country, should it be so surprising that that hostility is universal?
  There are three forms of neutrality, and no one ever asks what it is that the Tribune Group wishes to achieve. Its members are allowed to pretend to be in favour of something else. But they
  1496
  either favour an utterly disarmed Britain, a half-armed neutrality without nuclear weapons—certainly not in any alliance which depends on nuclear weapons—or a fully-armed neutrality. We do not know which sort of neutrality the Tribune Group favours, because no one has asked it, and it has never been obliged to defend its position and say which of those three forms of neutrality it espouses. If Britain is to become neutral, the obvious effect of such a radical change in British foreign policy would be an upset in the balance of power, and this would make the situation in central Europe, which is at present reasonably stable, quite unstable. Is this the Tribune Group's objective? Its members should think this through. They should not escape the burden of thinking through the consequences of their own attitudes.
  If they are in favour of a smaller United Kingdom contribution to NATO, are they happy to see our forces replaced by German forces? Have they thought that through? The truth is that, despite what they claim, money has little or nothing to do with their attitude. They wish to see a fundamental realignment of Britain in the context of the East-West dispute.
  There are fallacies which underline the concept of neutrality and its advocacy. There are those who believe that if Britain became neutral other countries would follow suit, and there are other people who say that once our virginity is restored our influence in the world will be much greater.
  Let me make it quite clear that no country in the world—Socialist or otherwise—is utterly disarmed. Therefore, no one could conceivably follow such a British example. Secondly, are we to imagine that the restoration of our virginity would increase our influence in the councils of the world? I think it would mean that we would have less influence on our friends, and I doubt whether it would mean that we would have very much influence on the Soviet Union. The Russians would regard our neutrality as something in their interest. The real truth is that the Tribune Group Members feel neutral between the United States and the Russian alliance. They want Britain to leave NATO and the Atlantic Alliance. At best, they see American capitalism and Russian

  1497
  dictatorship on all fours, and at worst they want Britain to change sides in the context of the cold war.
  If those in the right wing of the Labour Party are not prepared to take the intellectual battle into their camp, someone else has to do so.
  6.37 p.m.
  Mr. Richard Crawshaw: As I propose to refer to the Secretary of State, I apologise for being absent for a short time during his speech, for reasons of which you are aware, Mr. Deputy Speaker. I believe that this debate today is very different from defence debates in the past, because today we are being asked to approve or agree with a policy to reduce our defences when we have every reason to believe that this reduction is being made contrary to advice given. That makes a tremendous difference to the effect on people who really believe that the defence of this country should be of prime importance to any politician.
  Before I develop the argument, I am sorry that my hon. Friend the Member for Salford, East (Mr. Allaun) is not here. I respect his views, but I wonder whether he has given any real thought to the reasons why Europe has been free from any major conflict for 32 years—the longest period in the lifetime of anybody here. The reason is, of course, that we have had some sort of balance between the forces of East and West. The argument for cutting our forces below a level that would encourage aggression is surely contrary to what my hon. Friend really wishes. People like him should ask themselves whether Hitler would have started the war in 1939 had we been capable of devastating Berlin at the beginning of the war, in the way we were at the end.
  Mr. Norman Atkinson: I have been following my hon. Friend's speech very closely. Is he really implying that the two world conflicts we saw in Europe were conflicts between East and West—the Russians and us? I do not see it like that at all.
  Mr. Crawshaw: I do not think that anything I said indicated that. From time to time there are countries which, given the opportunity, will exercise military influence throughout the world. Fortunately, we have ceased to exercise that
  1498
  sort of rôle, much to the benefit of this country and mankind generally. I put the question again—would Hitler have started the war, or would the Russians have invaded Czechoslovakia had Czechoslovakia been capable of unleashing atomic weapons on Moscow? These are questions that we should ask ourselves when we are asking what sort of weapons we should have. I do not discuss weapons with the objective of starting a war; on the contrary, I discuss them with the objective of stopping a war.
  I am sorry that the hon. and learned Member for Montgomery (Mr. Hooson) has departed. I went along with his argument for quite a way, until the intervention in his speech, at which point he thought it necessary to restate Liberal Party policy. I do not think that he was restating his policy, because what he said did not not tie in with anything he had said before. If he were to ask himself whether the Czechs would now be in their present position if they had had atomic weapons he would be forced to the conclusion that there is at present a call for atomic weapons.
  It is suggested that there would be no victors. If one reads deeply into what is happening in Russia, one can see that certainly the Russians are counting on being able to overcome a first strike. One has only to consider the number of people who are now trained and the millions of pounds that are being spent on underground shelters. The Russians have reached the stage at which it is estimated that a first strike would kill only 8 per cent. of their people, as opposed to 25 per cent. of the people in the West. We must ask ourselves whether, if they could reduce that percentage even further, a temptation would not exist for them.
  What we should be discussing is not how we shall win a war but how we are to prevent it starting. Anything I say is motivated towards that end. I am not an old blimp who thinks that we should keep up forces for the sake of our imperial past. When the present Chancellor of the Exchequer, as Secretary of State for Defence, was giving the reasons why we should stay in the Far East, I was arguing why we should get out and concentrate our defence in Europe, which is our home base. However, having got our forces out from everywhere else it

  1499
  now seems that we are incapable of protecting even the home base.
  It is no good saying that the Russians are peaceably inclined when they are spending on defence the amount of money that at present they are. Uncomfortable as many of us in the House today are at what is happening, no one is more uncomfortable than my right hon. Friends on the Front Bench, because they must know in their own hearts that what they are asking the House to approve just does not make sense. Nobody could ever fault my right hon. Friend the Secretary of State as a kindly, genial person. My only regret is that 11 years ago, as Minister for the Army, he was cutting the reserves away, and that his boss at that time was the present Chancellor of the Exchequer. Knowing what a good job my right hon. Friend did on that occasion, I am not surprised to find that he has his present position when further cuts are required.
  He must know that the Chiefs of Staff do not approve of what is being done. I should like an assurance that they do approve. We heard earlier the suggestion that the Chiefs of Staff ought to resign. God forbid that they should when they at least are able to say to the Government "We will do whatever you tell us because we are your servants, but we wish to make clear what you are letting yourselves in for, and you should not stand at the Dispatch Box and tell the House that we approve of it". Whilst we have such Chiefs of Staff we have a hope for the future.
  I ask my right hon. and hon. Friends to take into account the damage that has already been done to the forces and that will be done if we make further cuts. My hon. Friend the Member for Bishop Auckland (Mr. Boyden) said that there was no demoralisation of the forces. If that is so, it is a tremendous tribute to them. My right hon. and learned Friends know that our forces are untrained, in so far as they cannot get the petrol to carry out exercises or the missiles to fire from the aircraft. Our forces will be trained in the first few days of any conflict that starts.
  The capabilities for moving our forces to any area of conflict have almost ceased to exist. No wonder the Government are investing in travel agencies. That seems to be the only way in which we can get
  1500
  our commandos over to Norway. Have we any aircraft available to move tanks or helicopters to any scene in which they are required?
  I want to bring the argument down to the individual man. A few weeks ago we were told that the Parachute Brigade of the Territorial Army was being disbanded. I have had not only a past but a continuing personal interest in that brigade. I did not ask questions about it in the House when the announcement was made, because one is always in difficulties in plugging a unit in which one has a vested interest.
  I ask my right hon. Friends on the Front Bench whether they realise what is likely to happen to the soldiers in those units. I understand that they are likely to be given the opportunity to do three training drops a year. If a man joins that unit in the next month or so and is sent on a parachute course he may do this year's training in March or April. At the end of that course the chances are that he will not do another jump for 15 or 17 months. The worst time for anyone who has done parachuting is when he first finishes his course. A delay of perhaps 18 months will not improve matters. These men will be asked to jump on exercises when not only their lives but the lives of many of their colleagues will be at stake.
  This is a personal interest that I voice, but the situation is reflected throughout our forces. We are not even giving our forces the basic things with which to train. I am worried when I hear Regular Army officers saying that our reserve forces are in some instances better trained than the Regular Army. We must recognise that we are depriving our forces of the basic things that will help them to become good soldiers.
  I shall be unable to support my right hon. and hon. Friends tonight because I believe that what they are doing they will regret, even if they do not regret it at present. I only wish that they could take some other action, and I should like to think that perhaps one or two of them may find it impossible to remain in their present positions.
  6.48 p.m.
  Mr. Alan Clark: By now, Mr. Deputy Speaker, you will have become accustomed to the habitual

  1501
  pattern of these defence debates. That pattern consists of a sparse attendance on the Government side—at any rate, above the Gangway—a plurality of Opposition Members who wish urgently to expose the scandalous manner in which the Government are treating the Services, and a number of banal, soothing and utterly inconsequential clichés uttered from the Government Front Bench at the beginning and end of the debate which have absolutely no effect on the dangerous course that the Government pursue.
  Today, however, for the first time, I detect indications that the whole House of Commons is beginning to feel the nature of the perils at which we have arrived. Not only the moving and convincing speech of the hon. Member for Liverpool, Toxteth (Mr. Crawshaw) but that of his hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) and even the speech of the hon. Member for Hornchurch (Mr. Williams) show that serious misgivings are developing on the Government side. We may be able to draw some encouragement from this and possibly even be satisfied with the result this evening.
  On a personal note, I well remember that when I was a student and a self-styled defence expert I was given a book to review. The title was "The Politics of Western Defence". The right hon. Gentleman will not remember this, but I even telephoned him about the book some 18 years ago. If I had been told then that the author would one day be in charge of the nation's defence, I would have thought it an excellent choice, of a thoughtful, intelligent, patriotic man to whom we could safely entrust the security of the country.
  I find it incredible that the author of that book has changed to such an extent that today he can preside over the death by a thousand cuts which is being inflicted on the Services by the Government of which he is a member. The Government made cuts in March 1974, December 1974, April 1975, February 1976, July 1976 and December 1976, and are making more today. An aggregate of £1,700 million has been taken from defence spending. Yet the Secretary of State, unlike his predecessors, who gave convincing and serious assurances couched in the gravest language and quoted the nature of the threats
  1502
  with which we were faced, has no comment that is in the least constructive or reassuring.
  I ask the Minister who replies to the debate to confirm or deny four propositions relating to the condition of the Services. The first proposition is that the RAF no longer has any interceptor capacity other than against single intruders into our air space, and that it has no capacity for defending us for more than, at the very longest, 24 to 36 hours against escorted bombing attacks. I do not think that this is regarded any longer even as a feasible operational requirement.
  The second proposition is that the Royal Navy is incapable of guaranteeing the new fishing limits against intrusion, or of running even two convoys, one from the Atlantic and one from the Persian Gulf, still less of performing those two tasks simultaneously.
  The third proposition is that the garrison strength in Britain is lower than it has been at any time in the past century. We have hardly the capacity to defend ourselves against an amphibious or paratroop attack by a lot of Cubans, still less by the Soviet Union.
  The fourth proposition is that many units of the Rhine Army have undergone only one course in the last year of firing live missile ammunition, and that field morale and efficiency are in serious jeopardy because of restrictions in the use of fuel and equipment.
  In addition to these immediate failings, there is the long-term question of weapons procurement. All Labour Members must know that the Government have in their hands the ability to reduce unemployment—I hesitate to use the phrase "at a stroke"—by exporting the defence industries of this country. The defence and weapons production industries are among the very few successful exporters and earners of foreign currency. With motor cars, textiles, and so on, we are in net deficit, but on weapons we are in net credit on foreign exchange.
  Were we to implement a proper weapons procurement system, and genuinely to co-ordinate and encourage the marketing and exporting of British weapons, we should have the capacity greatly to improve the equipment of our forces, to contribute significantly to our

  1503
  foreign exchange earnings, and to reduce substantially the excessive number of unemployed. But instead of adopting constructive solutions of this kind, the Government, as is their conditioned reflex, tend to resort to the solution of the gimmick.
  A classic example is the suggestion by the hon. Member for Hornchurch, made, as it were, out of the blue, that the RAF should be abolished. The hon. Gentleman devotes a considerable amount of time to studying defence matters, and I am always glad to listen to his opinions, but is not this a classic example of trying to avoid the fundamental point, which is that defence expenditure has been reduced well below the safety level? Is he not simply seeking to catch a quick headline by a sensational suggestion which would not only multiply cost and reduce efficiency but would cause serious structural damage to the way in which defence services are arranged? We would have great difficulty in repairing the damage when we returned to office.
  No one denies that the Army needs a close-support air component, and that this should be under the command of the senior officer on the spot. The Army's close-support component is highly defective. It should have more anti-tank helicopters and vertical take-off strike aircraft, and a better transport capacity. But that major responsibilities of air defence, such as interception, surveillance of our air space, and strategic bombing should be abolished or subordinated to land-bound generals is a suggestion that seems to be unworthy of consideration.
  Ludicrous as it is, the suggestion has at its root a refusal to face facts or to deny the argument that we cannot afford a certain level of defence. I do not impugn the integrity of Labour Members who may have strong pacifist convictions, or other ideological commitments which lead them to believe that social tension results from spending too much on defence, that death-dealing weapons are objectionable, and so on. But the argument that we cannot afford defence is untenable, because we are among the most highly-taxed nations in the West. It is ridiculous to say that the revenue is not there to spend on defence.
  What we are saying is that we have the money, but we do not wish to devote it to defence. People speak of easing
  1504
  social tension, or to use another fashionable phrase, of the social wage, to which so much Government spending is devoted. The Government published figures yesterday showing that the social wage was £795 a year for every man, woman and child. That is not a wage but a bounty, paid out by Governments to purchase the votes of those whose support they seek.
  Governments—the existing Government is not the first to practise this—put their own security of office above that of the country. They divert tax revenue to what is, crudely speaking, the purchase of votes and away from the proper purposes which national security would demand. This philosophy is at the root of the argument that we cannot afford proper defence.
  Mr. Litterick: Is the hon. Gentleman aware that the prison service forms part of the social wage? Would be regard that as a bounty for those who are beneficiaries of that accommodation?
  Mr. Clark: There are certain elements in present prison expenditure of which I do not approve, but I did not know that it was included in the social wage. I was interested to read, in a definition of the social wage, that a number of factors which I would have included have been excluded. If I put the social wage at £800 a year per head, that is probably more of an underestimate than an exaggeration.
  Despite the many high-sounding truisms uttered by Ministers, the only shock that will convert them before it is too late is a decisive vote by the House. There are signs that the perils are beginning to be perceived on the Government side of the House, and it is only by Back Benchers, regardless of party, making known their misgivings in the Lobby that the security of the United Kingdom will be sustained.
  7.2 p.m.
  Mr. John Cronin: I found some difficulty in following the erratic speech of the hon. Member for Plymouth, Sutton (Mr. Clark). I was puzzled to hear that he was worried that we might be attacked by parachuting Cubans. That is not usually considered to be a risk against which the Ministry of Defence should guard.

  1505
  This debate is one of the most bogus uses of a Supply Day that I can remember in my 21 years as an hon. Member. I was surprised that the right hon. Member for Chesham and Amersham (Mr. Gilmour) should lend his name to it. He is an amiable person of unquestionable integrity, but in 1973, when he was a senior Defence Minister, the then Conservative Government cut defence expenditure by £250 million. In present-day terms that is equivalent to over £400 million and is much greater than the cut which is currently being proposed. Far from protesting about cuts, the right hon. Gentleman took part in the exercise so enthusiastically in 1973 that he was promoted to Secretary of State for Defence. Yet now he leads the attack on my right hon. Friend the present Secretary of State for doing exactly the same thing.
  Although it is surprising to see the name of the right hon. Member for Chesham and Amersham on the motion, it is not so surprising to see the name of the hon. Member for Stretford (Mr. Churchill). He is a newly-appointed Front Bench spokesman and we understand his enthusiasm and know about his natural ebullience.
  Mr. Townsend: If the hon. Gentleman had three hospitals in his constituency and one was closed, would be not regard that as a good argument for not closing the others?
  Mr. Cronin: The previous cuts made by the present Government were based on a general reduction of defence commitments. The defence review made them reasonable. However, this is past history. The debate is about cutting the salary of my right hon. Friend who has been Secretary of State for only a few weeks.
  The right hon. Member for Chesham and Amersham quoted Field-Marshal Sir Michael Carver, who said in 1975 that our defence expenditure had reached bedrock, and General Haig, but whoever heard of a general being completely happy with the armed forces at his disposal? It is only natural that he should try to obtain more. Whoever heard of a surgeon being happy with his operating theatre or a headmaster who did not want more equipment for his school? It was a little ingenuous of the right hon.
  1506
  Gentleman to quote the remarks of those generals.
  The right hon. Gentleman also suggested that the morale of the Services had been impaired since he was Secretary of State. That is untrue.
  Rear-Admiral Morgan-Giles: I hope the hon. Gentleman will make clear that he was not impugning the integrity of the generals or the Government's professional advisers.
  Mr. Cronin: I do not think that the hon. and gallant Gentleman could have heard what I was saying. There was no question of my impugning the integrity of any officers.
  In the last nine months I have twice been to sea with the Navy, and for equestrian purposes I have visited the Household Cavalry barracks twice a week for several years. I have taken advantage of these opportunities to find out the state of morale, and I suggest that it is extremely high. Obviously the Services do not like cuts, but any young officer in the Navy or the Army will say that they have learned to live with them. They all recognise our difficult economic circumstances. The right hon. Member for Chesham and Amersham does no service to our Armed Forces when he suggests that their morale is low.
  The right hon. Gentleman quoted from the useful report of the Defence and External Affairs Sub-Committee, which warned in January last year against further defence cuts. I supported that report at the time, but our economic circumstances have changed completely since then and it became obvious that there had to be much larger cuts in public expenditure with defence taking its fair proportion. In fact, defence expenditure has not been cut so much this time as has the spending on other programmes.
  The right hon. Gentleman also referred to the visit of the Chiefs of Staff to the Prime Minister, but these visits are not infrequent. The right hon. Gentleman did little justice to the Chiefs of Staff by suggesting that they are dissatisfied with defence expenditure and that the only action which they could take was to complain to the Prime Minister.
  The Chiefs of the Defence Staff, Air Chief Marshal Sir Andrew Humphrey, Admiral Sir Edward Ashmore, General

  1507
  Sir Roland Gibbs and Air Chief Marshal Sir Neil Cameron, are men of immense experience and the utmost integrity. If they felt that the efficiency of the Armed Forces had been reduced by as much as hon. Members opposite suggest, they would feel it necessary to resign. If they felt that our defence capability had been so reduced as to constitute a danger to this country's security, they would have the right and duty to resign.
  There have been resignations in the past. The First Lord of the Admiralty, Lord Fisher, resigned during the First World War and the Commander-in-Chief of the Army then threatened to resign unless certain action was taken. This is not uncommon and has occurred more recently. I am sure that these officers would have resigned if they had felt that the country had been put in danger by the Government's action.
  Mr. David Walder: Is not the hon. Gentleman being a trifle naive when he uses the phrase "If the country were in danger"? My hon. Friends are saying that the Chiefs of Staff are concerned about the cuts. Does the hon. Gentleman think that they called upon the Prime Minister to wish him the compliments of the season?
  Mr. Cronin: Of course the Chiefs of Staff are concerned about the cuts. We are all concerned about the cuts. That is why we are here. I am suggesting that, if the cuts are so serious in their nature as to endanger the country, the Chiefs of Staff would certainly resign. If they had resigned, they would have done so under circumstances that financially would have been extremely comfortable. They would have suffered no financial hardship if they had taken that course.
  Rear-Admiral Morgan-Giles: The hon. Gentleman is being grossly unfair. The Government have taken a political decision. It is not fair to say that the Chiefs of Staff should resign to make their point. They have made their point over and over again. They made their point when they went to the Prime Minister. It is the politicians who have refused to take the advice of the Chiefs of Staff. It is Ministers who should resign, not the Chiefs of Staff. The hon. Gentleman knows that Chiefs of Staff have resigned in the past. They have done so while he
  1508
  and I have been Members. Their resignations have done no good. I remember the present Chancellor of the Exchequer dismissing the matter with a wave of his hand when he was Secretary of State for Defence. Further, the Chiefs of Staff would lose financially if they were to resign.
  Mr. Cronin: I think that the hon. and gallant Gentleman has misunderstood me again. I have not said that the Chiefs of Staff should resign. I said that the fact that they have not resigned indicates that there is no serious deterioration in defence as a result of these financial measures.
  Rear-Admiral Morgan-Giles: The hon. Gentleman has said that they are men of integrity.
  Mr. Cronin: I have made it clear that they are men of integrity. They are people for whom I have the highest admiration. The mere fact that they are continuing to hold their offices and doing the best they can indicates that the danger is not serious.
  It is obvious that the security of the United Kingdom is not seriously prejudiced. The total of these cuts is 3·8 per cent. of defence expenditure. Conservative Members speak as though the Armed Forces have been decimated by these cuts. The cuts are of a small percentage and they will be in the form of cuts in various works of various types, in administration, in support costs and in equipment. I suggest that, if the cuts in equipment are to be only 1 per cent. of the total cuts of the 3·8 per cent., they cannot be of a very serious nature when set against the total expenditure by the Armed Forces.
  I suggest that the cuts are sensible and reasonable in their nature in terms of the economic situation. However, I hope that there will not be any further cuts of a substantial nature. There is no doubt that the British forces must make their contribution to NATO, and NATO must make it obvious to the Soviet and Warsaw Pact forces that it would be a doubtful matter for them to undertake an attack which would have any conceivable success. It should throw some doubts in their minds as to the possibility of nuclear retaliation. That is something that should be in their minds.

  1509
  I draw the attention of Conservative Members to a publication called "The Military Balance 1976–1977" published by the International Institute for Strategic Studies. The institute has none of my hon. Friends who are members of the Tribune Group on its council. In fact, the council consists largely of generals, air marshals and defence experts from all over the world. In the concluding chapter, which is entitled "The Theatre Balance"—that is, the balance between NATO and the Warsaw Pact—it states:
  "First, the overall balance is such as to make military aggression appear unattractive. The defences are of such a size and quality that any attempt to breach them would require major attack The consequences for an attacker would be incalculable, and the risks, including that of nuclear escalation, must impose caution."
  Those are the words of an organisation that devotes itself to the study of defence matters. It has no party or political purpose behind it and is of a multinational nature.
  I suggest that the House should pay more attention to an international organisation such as the International Institute for Strategic Studies when referring to the capability of NATO and our contribution to it than to the speech made by the right hon. Member for Chesham and Amersham.
  I seriously hope that there will be no further substantial cuts. I should have some difficulty in going through the Lobby to support any further defence cuts. My attitude if there were substantial cuts in future would be somewhat like that of my hon. Friend the Member for Liverpool, Toxteth (Mr. Crawshaw) as he feels at present. Although I think that he is being rather premature, if there are further defence cuts I should be inclined to follow his example.
  Mr. Crawshaw: Has my hon. Friend taken fully into account the statement made by a previous Minister who said that we could not make any further cuts?
  Mr. Cronin: I have done so, just as I have taken fully into account the total change in the economic situation between the early part of last year and the end of last year. That is the change that initiated these cuts.
  1510
  There is no escape from the fact that the Soviet Union is a potential aggressor. Since 1940 no fewer than 10 formerly independent countries have been overrun by the Soviet Union. Either puppet Communist Governments have been installed in them or they have been taken over and integrated into the Soviet Union. Estonia, Latvia, Lithuania, Poland, Romania, Bulgaria, Hungary, Czechoslovakia and East Germany have been overrun by the Soviet Union's armed forces in the past 35 years. It would be most unwise for any responsible Government to assume that its desire for more territory or more puppet States had now been satisfied. I suggest that the Government must have that in mind before they consider any further defence cuts.
  Does the Soviet Union have the power to resume its aggressive policies? In the central front in Europe it has a small majority of ground forces, double the number of tanks, double the number of aircraft and immense capabilities of reinforcing its forces in Europe. Whatever cuts may be contemplated in future, I suggest that they should be discarded by the Government. The people of this country will hound out of office any Government who at any time seriously endanger their security.
  7.18 p.m.
  Mr. Michael Mates: It would be a difficult and daunting task for me to attempt to take up the tortuous logic of the hon. Member for Loughborough (Mr. Cronin). I shall comment on only one facet of his speech. The hon. Gentleman was trying to say that in the end he reluctantly agreed with the cuts because of the changed economic circumstances. However, he made no mention of the fact that there has been no change in the potential enemy's military circumstances. There can he no argument that as we become inevitably economically weaker we must equally inevitably become defensively weaker. That argument makes no sense.
  Mr. Cronin: Surely the hon. Gentleman must be aware that defence forces cannot be efficient and cannot serve any useful purpose unless they have a sound economic base behind them.
  Mr. Mates: I would say the opposite. No country can maintain any economy,

  1511
  however weak, unless it is soundly defended. Without sound defence, we have nothing. That is where we differ in our points of view.
  I take up the point made by the Secretary of State for Defence when he rather discourteously accused me of misquoting him. I see that his ministerial colleagues, by nodding their heads, seem to agree that I misquoted him. The right hon. Gentleman was quoting from his predecessor the right hon. Member for Barnsley (Mr. Mason), who on 16th December 1974 said:
  "We promised … that our defence burden would be brought into line with that of our main European allies."—[Official Report, 16th December 1974; Vol. 883, c. 1164.]
  The Secretary of State said that was the basis upon which the Government had been planning their cuts to bring them into line with our allies.
  Later the right hon. Gentleman quoted the Supreme Allied Commander Europe as having said that it was for the military to recommend the level of defence that was required and that it was for the politicians to decide the level of defence which would obtain based upon the threat from the potential enemy. The Secretary of State seemed to think that was a sound proposition too. These two propositions are totally inimical.
  I should like the Minister of State, either now in one word or later, to say upon which of these philosophies the Government's policy is being based. It cannot be based upon both. If it is based upon the latter, the only honest thing would be for the Government to say "The threat is such that we require such-and-such a level of defence to be credible and to deter, but alas, we cannot afford it. As we cannot afford it, we have decided to cut some of it against the advice of our Chiefs of Staff and against our own better instincts." That at least would be honest and we could argue about it.
  Yet that is not what the Secretary of State said. The right hon. Gentleman and his predecessor and other members of the Government, each time they have taken another slice out of the defence budget, have repeatedly said "Never mind. It is still all right."
  That is not a tenable position. It is particularly not tenable as a result of what the former Secretary of State for
  1512
  Defence said when he reported to the House upon the major defence review. At that time I was in the Defence Department and played some small part in the construction of that defence review. The then Secretary of State said:
  "I was determined that the process of adjustment to the realities of our economic, strategic and political position should not be by a series of arbitrary cuts. Above all, I wanted to make sure that our defenc priorities were seen to make sense."—[Official Report, 16th December
  1974; Vol. 883, c. 1149.]
  There was to be no series of arbitrary cuts—just one well-thought-out, well-planned cut which was to reshape our defence forces to their new rôle for the next 10 years. That was the announcement of the major cut of £7,000 million. Since then, as has been said—I shall not bore the House with the details again—there have been another five cuts. What have they been if not arbitrary? There has been no argument that they were logical. There was no argument that we were changing our rôle further. The only argument was "There are to be cuts in public expenditure, and defence must take its share."
  That is why the major accusation against the Government is that their policy makes no sense from any point of view. That is why it is objected to by the Oppositon, by the Liberal Party and by the left and right wings of the Labour Party. No one can make any sense of this policy because there is no logical consequence to what the Government allege they are trying to achieve.
  I hope that the Minister will tell us either that he is determined that we shall do no more and no less than our allies, and to hell with the enemy, or that he would like to meet the threat which he admits is present, but that it is not a priority within the Government's policy or that he is not bothered about it. No one can understand any logic in this sequence of cuts. No one understands why they have come about and, worst of all, where they are leading.
  The Secretary of State when challenged, said that the Army in particular was in no way being made less efficient or less operational for its major task now, which is in Northern Ireland. That is undoubtedly true. But, as a result of that priority—I do not believe that the Minister would deny this fact—a serious

  1513
  defect is taking place within the Army's professional, operational and training capacity in its other rôles outside Northern Ireland.
  Complacently, the Secretary of State said that we were sticking to our treaty obligations, that we had 55,000 troops in the British Army of the Rhine and that we shall continue to fulfil our rôle there. I should like to know when last there were 55,000 troops in the British Army of the Rhine. It has been a very long time since the British Army of the Rhine was in any way up to strength. Indeed, as the House was told, some years ago special permission was sought from and granted by the Supreme Allied Commander for troops to be withdrawn because of our Northern Ireland commitment. That kind of complacency does no good to the Government's defence policy. The bulk of the Army simply is not there. When it is there, it is so restricted that it cannot train to do its major job as part of NATO. That is why our NATO Allies daily grow more angry with us and daily trust us less. We used to be the most reliable ally in that partnership. Sadly, that is not so today.
  Far more significant in the long term are the options which will have to be faced within the Services as a result of this apparently never-ending and never-to-end series of arbitrary cuts. I have no doubt that this is part of the reason why the Chiefs of Staff took the extraordinary step of demanding their right to plead their cause personally to the Prime Minister.
  I hesitate to mention naval matters within earshot of my hon. and gallant Friend the Member for Winchester (RearAdmiral Morgan-Giles). However, as he has left the Chamber, I shall not now so hesitate. The Royal Navy will surely face a philosophical crunch of major proportions as a result of these extra cuts. We shall have to decide whether we can any longer maintain both an ocean-going and a small-boat offshore Navy. There are sound reasons, into which I shall not go in detail in view of the time, why we must maintain both; firstly, to protect our own waters and installations and ultimately our own shores; secondly, to protect our shipping, which still trades throughout the world; and, thirdly, to be
  1514
  a credible and active partner in the southern part of NATO in the Mediterranean.
  We shall no longer be able to perform all those tasks. There will come a time when we can no longer say "We will delay the building of this or that ship; we will delay the refitting of this or that ship." We shall have to say that we cannot do both. If we are to have a credible Navy, we must give up one rôle or the other.
  That has happened with the Royal Air Force. We have had to give up our rôle of transporting troops. The last time that happened—incredibly efficiently—was when the totally unexpected requirement arose for the evacuation from Cyprus. Would any Minister stand up and say that could have been done by charter aircraft from the civil fleet? It was only the result of the training, understanding and co-operation that had been developed over the years that enabled both the Army and the RAF to get together in the emergency to do a proper job.
  When we can no longer do that, when we have to send Marines on an exercise on a civil ferry because we have no capability to transport them, is there any point in maintaining those forces? We are approaching a threshold beyond which we shall have so to change the shape and future of those forces that we shall no longer be able to maintain our current commitment to NATO, which the Government still say is absolute.
  Let us consider the practical effect of these cuts. It may seem common or garden to talk about restrictions on training. Indeed, the hon. Member for Bishop Auckland (Mr. Boyden) said that we spend too much on training. What point is there in investing thousands of millions of pounds so that we can keep ahead technologically of the Warsaw Pact forces—which we do because our Air Force is well equipped and we have the latest missiles—if we cannot train our forces to use them? What point is there in providing the British Army of the Rhine with the latest battle tank if we cannot send it out to train?
  It is all very well to say that we have the equipment, but if our forces cannot be brought together in a dark part of a wood on a winter's morning in the rain we might as well not have the tanks.

  1515
  We have been held in respect in the past by our NATO Allies. They have seen that our Army is properly trained and can do its job. I accept that it has sometimes been behind in equipment and perhaps in manpower, but our allies have known that when it was needed the British component of the force would be there and would be able to do the job required. The same cannot be said for some other allies, and that is common knowledge. The burden of Northern Ireland is having its effect on the troops of the British Army of the Rhine.
  At the weekend I spoke to a senior officer of the Royal Engineers who had just returned from a round of visits to Engineer units in Germany. He told me that he was seriously worried about the Royal Engineers' ability to carry out their primary rôle because recent emphasis in training has been—rightly—to prepare them for their duties in Ulster. They have had to down tools and learn to be infantrymen. They do four-month tours in Northern Ireland and do a first-class job, but when they return, because of the fuel restrictions, they are not able to train for their primary rôle as engineers and cannot go out and lay bridges or practice other duties which are essential to keep the fighting forces going. There is anxiety about the capability throughout BAOR to do its task. That must have an effect on morale. Morale is high at present and, of course, troops can and do make the best of a bad job. But when they can no longer do their job because it demands more than the equipment which is available, inevitably morale will fall. I pay tribute particularly to the junior officers and NCOs concerned for the morale of troops because they are virtually confined to their barracks, whereas five years ago they were out and about on their tasks. It is a tribute to these young leaders that morale is as high as it is.
  Once again we see double standards from the Government. They pledged themselves to defend us, and they have failed. When they cut defence, they throw people out of work. A howl would come from the Government Benches if the Government cut jobs to the extent of 60,000, as they did in the 1974 review, in any other industry. If that number of workers were thrown out of work in the car, steel or coal industries, one can
  1516
  imagine what would happen: the Government would fall. But because these are people who dedicate their lives to the defence of our country, not a word is spoken. Nobody on the Benches opposite complains about careers cut off in midstream of the thousands who are thrown out of work.
  These double standards are no more apparent than when one observes the Secretary of State trying to defend what he has done. He has failed. The Ministers who are responsible for our defence have failed to carry the day with the Government. It is no good telling the Chiefs of Staff or saying that they or the Services are to blame.
  Ministers know more about the threat than I. If they cannot carry their colleagues with them about the seriousness of the threat and the perilous state to which our defence could fall, and if they are honourable men of integrity, they should resign.
  7.35 p.m.
  Mr. Ron Thomas: I support the amendment, which is signed by about 50 of my hon. Friends. As my hon. Friend the Member for Salford, East (Mr. Allaun) said, there would have been many more signatures had hon. Members been available to sign last night.
  The amendment speaks of the illusion of the cuts in arms expenditure. Great play has been made of the so-called cuts in defence expenditure, but they are not really cuts. They are simply cuts in the unrealistic totals which the Tories threatened to spend in government. It is nonsense to suggest that a reduction in projected spending is a real cut.
  The illusion was reinforced on 14th December, when we debated the Supplementary Estimates. The Secretary of State asked for a further £500 million. We made it clear then that we did not criticise the part of that sum for increases in pay to members of the Armed Forces, but we also said that it was unacceptable for the Government to ask for another £500 million and then attempt to placate us by saying that they were cutting some hundred million pounds a few days later.
  The Secretary of State gave a brief outline of what the cuts will mean. Although it was difficult to hear what he

  1517
  said because of the noise from the Opposition Benches, I understood him to say that there was between £50 million and £70 million of work in progress. He said that £80 million of the cuts would be in equipment and that most of these would take place as a result of the delay in equipment procurement because NATO had not yet reached a decision on Nimrod. The Secretary of State said that the rest of the cuts involved administration. We are right to challenge whether these are real cuts or whether they are simply caused because NATO has not reached a joint decision on the kind of equipment that it requires.
  A number of reasons have been put forward about how we should decide on our level of defence expenditure. None of them has convinced me. It is all very well to talk in vague terms about the security of the country and to call in aid the defence chiefs. I cannot imagine that the defence chiefs have ever been satisfied with the amount that we spend and I do not believe that they will ever be satisfied. Opposition hon. Members and some hon. Members in my party gave a better, more responsive and sympathetic hearing to the defence chiefs than they did to workers in other parts of the public sector who are telling us about the effects of public expenditure cuts on housing, health, education, and the rest. I would not pay heed to the so-called Chiefs of Staff in their demand.
  Many hon. Members on the Government side have continued to support Labour Party policy, which is quite clear. It is that we should reduce our defence expenditure to the level of that of the other NATO countries as a proportion of gross domestic product. That seems to me to be a legitimate demand. It has been twisted around by certain people, who have said that perhaps we ought to base defence expenditure on the size of the population. As I have said previously, how ludicrous it would be if it were suggested that a country's defence commitment should be based on the size of the population. Goodness knows what China and India would then be spending on defence to keep in line with the United States or the Soviet Union if that argument is to be used.
  We note also that our NATO Allies spend less on defence as a proportion
  1518
  of their GDP—their wealth creation—than we do. Not for them defence expenditure. Over the last couple of decades they have ensured, unlike Britain, that their resources went into capital investment, and that investment created a much higher level of economic growth. We feel the backlash of that with our continuing import bill and the continuing import penetration of manufactured goods, creating considerable unemployment.
  The hon. Member for Petersfield (Mr. Mates) talked about levels of defence expenditure, and so on. I ask him to think about Japan. He may be able to produce all kinds of arguments, but Japan, I believe, spends about half of 1 per cent. of her GDP on defence. What Japan has done is to push those resources into capital investment and industrial development.
  Mr. Mates: Yes, but by the treaties signed after the Second World War Japan was forbidden to create any defence forces, and the Americans specifically undertook to defend the Japanese themselves. That was the situation until the last year or two, anyway, so of course Japan did not have to spend money on defence. That was being done for the Japanese. If the hon. Gentleman could find a country that would do that for us, I would be the first to accept the offer.
  Mr. Thomas: That was true initially but it is certainly not true today.
  As a proportion of our GDP, we are spending on defence more than our NATO Allies—except Greece and Portugal, I think. We stand well up in the league table. The amount that we have devoted to defence since the last war is one of the major reasons for our economic decline, because the other countries—West Germany, France, and so on—have been devoting their resources to capital investment and the regeneration of their industries. It was not until France got out of the Algerian commitment that the French began to regenerate their industries.
  What can be more inflationary than defence expenditure? We hear much from the Opposition Benches, from the militant monetarists, about the causes of inflation. We hear about money supply, and rushing up the M1 and the M3,

  1519
  domestic credit expansion, and so on. We never hear anything about military expenditure in that respect. What can be more inflationary than to be spending £6,000 million a year on something that no one uses or buys? That must be inflationary expenditure.
  Mr. Eldon Griffiths: Without dealing with the hon. Gentleman's main argument. may I ask him to withdraw the suggestion that the soldiers in Northern Ireland are doing a job that no one wants done? Will he also say on which other ally he would wish to become more dependent? Does he wish us to become more dependent and a capitalist America, a nuclear France, of the Germans, whom he has so often attacked?
  Mr. Thomas: I have not even mentioned the situation in Northern Ireland. I do not know how the hon. Gentleman connects that with what I have been describing about the inflationary effects of defence expenditure. I should like to see the British soldiers, who are ordinary working-class lads, out of Northern Ireland as quickly as possible. But that will be achieved only by a political settlement. It will not be achieved by a military settlement.
  Secondly, I am making the point that we should be spending no more and no less in terms of our wealth than the other NATO countries. It is ludicrous that we are passing across the exchanges £600 million or £700 million a year in hard-earned currency to West Germany, which is sitting on a massive gold and convertible currency reserve surplus. We have been doing that year after year. Over the last three years we have given West Germany, over the exchanges, the equivalent of what we have now had to crawl to the IMF to borrow, and we have had to cut back on all our social services to do it.
  Offset arrangements have been mentioned, but even those were near to useless because they merely meant that West Germany bought from us what she would have bought in any case to offset this £600 million or £700 million a year. Our overseas military commitments this year are likely to cost about £1,000 million in foreign currencies. I should be grateful if the Minister would tell us the exact situation. However, that is never mentioned when we are discussing our balance
  1520
  of payments problems and our other problems.
  Jobs have been mentioned. I am not asking, nor is the amendment asking, for workers to be thrown out of jobs and into the dole queues. I suggest that those of my hon. Friends who sit below the Gangway have a far better record than practically anyone on the Opposition Benches in fighting against unemployment.
  Mr. Mates: Double standards.
  Mr. Thomas: I do not know what the hon. Gentleman means.
  Mr. Mates: What I mean by "double standards" is that defence cuts cause unemployment. The major cut in 1974 involved 60,000 people being thrown out of work at a stroke. The hon. Gentleman would not allow that to happen in any other industry.
  Mr. Thomas: If the hon. Gentleman reads the amendment, he will see that we make it absolutely clear that we are disappointed that after two years in office we have not yet begun to plan for the redeployment of workers, whether in the defence industries or the Armed Forces. That is contained in our amendment. We want to see the creative and innovative skills of the workers in aerospace, for example, being devoted to socially desirable projects, and to reducing the amount of imports.
  Here we have an industry such as aerospace which employs the bulk of our technologists and probably a higher proportion of our craftsmen and innovators than any other industry, but the hon. Gentleman says that unless they are employed in making weapons of destruction they must be unemployed. We repudiate that notion.
  Mrs. Jill Knight: Will the hon. Gentleman give way?
  Mr. Thomas: No. I have given way three times, and others wish to speak.
  We are appealing to the Government to set about planning the redeployment of these workers and resources on more socially desirable and economically essential projects and products. We are not saying that they should be sacked and put into the dole queues.
  Mr. Mates: That is what you have done.
  Mr. Thomas: if there are any double standards, they come from Opposition Members who, if they had their way, would make cuts in public expenditure that would make the inter-war years look like an economic miracle. I have never heard a squeak from the Opposition about unemployment in the education, health and social services, or local authorities. The Opposition are quite happy to raise the unemployment level by another 100,000. We are appealing to the Government to begin to plan the redeployment of these workers and the resources concerned.
  There is one thing on which I know Conservative Members will go along with me. I should be grateful if my hon. Friend will make a statement on how much progress has been made in achieving effective trade union organisation in the Armed Services. Many of us on the Government Benches want to see such a development. Right across NATO, in countries which are held up as examples to us, the armed forces are organised in unions. We want to see effective collective bargaining in our Armed Forces. Those Conservatives who shed crocodile tears about the Tommy, and the effect on him of redundancy, should support us in that.
  7.50 p.m.
  Rear-Admiral Morgan-Giles: The hon. Member for Bristol, North-West (Mr. Thomas) will not expect me to follow him into his ideological quicksands. However, if there were trade unions in the Forces the one thing for which those men would be asking is the tools to do the job properly.
  I think that most hon. Members will have enormously appreciated the sincere and thoughtful speech of the hon. Member for Liverpool, Toxteth (Mr. Crawshaw). As he said, this debate is different from previous defence debates. I agree that, with certain exceptions, more sense has been spoken and there does not seem to be quite the usual ideological divide between the two sides of the House. I think that it is time to speak up, and I hope that the nation will wake up.
  There have been five successive rounds of defence cuts by this Government—
  1522
  three during 1976 alone. The Government should be asking themselves what the Service man thinks. What does he think when he is told that he will have a "review to end all reviews" and then has to face five lots of cuts? Militarily these cuts are absolutely wrong, as was shown by the remarks of the Chief of the Defence Staff and the much-discussed visit of the Chiefs of Staff to the Prime Minister.
  We must castigate the Secretary of State. He looked today about as unhappy as I have ever seen a Minister at the Box. He has come in sackcloth and ashes in relation to his remark about the Chiefs of Staff. I appreciate and entirely sympathise with his remarks that any of us can make a mistake. I know that only too well: I have done it myself. But we have all seen a thoroughly unhappy man today. As Secretary of State, he must have received the top secret briefing which has been mentioned. I am very sorry for any man who knows those facts and yet has to try to put across this sort of policy.
  There is a real problem about how to make more widely known the advice of the Chiefs of Staff. One frequent suggestion is a Select Committee on Defence. Obviously, its members could not have the full top secret briefing which only the Secretary of State and the Prime Minister have—and which, I believe, the Leader of the Opposition should have, although that has not been the practice so far. But I do not see why the Chiefs of Staff, who are sensible and responsible people who know how to look after themselves, should not be allowed to give evidence to a Select Committee. No harm, and possibly a great deal of good, would be done.
  We see equal absurdity in the economic arguments for the proposed cuts of £100 million in 1977–78 and £200 million the year after. According to the Chancellor, by then we shall be out of our economic difficulties anyway: so there is no possible excuse for the cuts. The Government cannot have it both ways. Either they have sorted out our economic problems, in which case by the time the cuts are applied they will be unnecessary, or they have not got the economy right.
  The Chancellor is the evil genius in this situation. It is his salary which should be cut. As Secretary of State for

  1523
  Defence, he presided over the greatest and fastest withdrawal in British history from any positions of influence we occupied anywhere in the world. He is the architect of our national disgrace. Those are strong words, but we must face the fact that we are in a disgraceful condition compared with our situation in 1964. All over the world—in NATO and Europe, at sea and in the air—our position of influence has virtually vanished in 10 or 12 years.
  To me and to many Service people—my "bamboo wireless" still works—the Chancellor's motives have always been suspect. Certainly, had he been a serving officer he would never have passed the positive security vetting in the Ministry over which he presided for so many years.
  If the Government's commitment to NATO means anything, it means that Britain must behave in such a way as to retain the confidence of our NATO partners. As my right hon. Friend the Member for Chesham and Amersham (Mr. Gilmour) said, the latest cuts cannot fail to diminish the confidence that we enjoy within NATO. The Army in BAOR and Northern Ireland, as my hon. Friend the Member for Petersfield (Mr. Mates) so eloquently pointed out, is more than fully stretched already. The Royal Air Force is terrifyingly under-equipped.
  As for the Navy, which can perhaps make Britain's greatest contribution to NATO, the latest suggestion is that it should face 5 per cent. fuel cuts. That is absurd. All Royal Navy ships spend the vast majority of their time travelling at the economical speed of 12 to 14 knots—15 or 16 miles an hour in landlubbers' terms. The ships burn more fuel per mile if they go more slowly, so ships go at that speed to save fuel. Therefore, the only ways to conserve fuel are to slow down and not use full speed, even in an emergency, or to cut the training function.
  I am talking particularly about antisubmarine training. The Royal Navy is the world's expert in anti-submarine warfare. No form of training is more important now, when the Soviet Union is building up its submarine force and commissioning one new nuclear submarine per month.
  1524
  If we are to survive in any emergency against those submarines, which are essentially weapons of attack, and if we are to pursue the technologically advanced anti-submarine methods of the present day, ex hypothesi our ships must go fast. These nuclear submarines go far faster than has ever been admitted by any nations which possess them. One cannot train for anti-submarine warfare at slow speed. So I see no sense in the suggestion of a 5 per cent. fuel cut.
  Such a cut, of course, would also affect NATO strength on the flanks and our capacity to ensure the free flow of exports and imports along the trade routes of the world. Is it not absurd to reduce the Navy's fuel allocation just when, in the last couple of weeks, it has been given the vast additional task of fishery protection and the defence of our oil rigs, a matter which rightly worries hon. Members on both sides of the House?
  The hon. Member for Hornchurch (Mr. Williams) is a sensible fellow and we know his commitment to the forces. However, I entirely disagree with his argument about reconstituting the Royal Air Force. I am surprised that he, having served as a National Service man in the RAF, should put forward such a suggestion.
  There are many reasons against such a change. The first is the damage to morale. Each Service has its own way of doing things. I speak not as a member of the Royal Air Force but as a great admirer of it who has flown with it in peace and war. The RAF, like the other Services, has its own traditions, its own slang and its own techniques which have been built up over the years. I had the privilege of being on loan to the RAF for a year in the Middle East. When three aircraft had been totally destroyed beneath me, I thought it was time to go back to the relatively quiet waters of the Royal Navy! But I shall admire the RAF and its way of doing things until my deathbed.
  The strategic arguments against the proposal made by the hon. Gentleman were extremely well summarised in a letter in this morning's Daily Telegraph from Air Chief Marshall Sir Denis Smallwood. Anything I could add to that letter would be superfluous. I remain unconvinced that there would be any economies. We

  1525
  have an integrated Ministry of Defence, and to go back to the Trenchard arguments of the 1920s and reorganise the RAF all over again would be an absudity.
  Instead of cutting away at defence expenditure for the sake of the internal politics of the Labour Party, I invite the Secretary of State to think back to some of the great events in the past history of the Labour Party. Let us think back to the bravery and farsightedness of Mr. Attlee when he went ahead with the production of the atom bomb. Let us think back to the Labour Government's involvement in the Berlin blockade—a significant event in our national history. Let us think back to the great Ernest Bevin and his stalwart defence of British interests everywhere. I end by imploring the Prime Minister and his Cabinet to show some guts and do their duty by the country.
  8.3 p.m.
  Miss Jo Richardson: The hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) will, I am sure, forgive me if I do not follow the main part of his speech. I confess to being totaly at a loss in the minutiae of discussions on the Armed Forces.
  I begin by going back to the accusation made by the Opposition about the amendment to which I and several of my hon. Friends have put our names. The accusation was made that there was something sinister behind the amendment. There is nothing sinister behind it; it spells out clearly exactly what it means.
  If there is anything behind the amendment, it is the deep worry of a large number of members of the Parliamentary Labour Party, the Labour Party and the Labour movement that we are spending such a disproportionate amount of our total resources on defence, particularly at a time when we are in desperate economic straits and are cutting back on health, housing, education and reinvestment in our economy generally. That is what is behind the amendment.
  I view the defence strategy that we have operated for many years under this Government and previous Governments as being a danger to the country rather than a defence for the country. The possession of nuclear weapons by a country that is sandwiched between the two major
  1526
  Powers—assuming that we would not use them on a first-strike basis—is a danger to us. I am not against armed forces or against a certain level of defence spending. I am not a pacifist, but my view is that concentration on nuclear strategy is extremely dangerous, if not suicidal.
  I am glad that the Government have reduced their increase. That is all we can say about the so-called reduction of the past year or so. It is not nearly sufficient. Hon. Members will doubtless have seen the interesting speech made by Professor Robert Neild over the weekend. He is a distinguished economist, who has held several international posts and has also been in the Cabinet Office. He argues, as we do, that such a high proportion of spending on arms frustrates exporters by diverting resources which could be available for investment and research in other fields. That is precisely what my colleagues and I have been saying for so long.
  Anxiety has been expressed by my hon. Friends, Conservative Members and others outside the Chamber about the effect on employment of conversion from arms spending to spending on social projects. That is why the amendment asks the Government to start now to make plans. We do not say that they should do this overnight, because we know that that would be impossible. We ask them to make plans for a re-think about our arms industry, and to begin now.
  We are accused of threatening unemployment by converting arms industries to industries for social purposes. I wish that the Government would get themselves straight on their present employment policy in the arms industry. I accept that there should be some arms building here, but why do we have to place so many orders in the United States of America? We are told that some orders for American equipment include offset arrangements for substantial parts of the contracts to be manufactured in United Kingdom companies. Surely, the outcome of the understanding about this offset is that the United States companies concerned are prepared to allow British manufacturers to compete with American manufacturers for the contract work, but that almost certainly means that that work will in the end go to American-based companies, and those orders will not be placed in this country.

  1527
  One example of this that has been referred to during the debate is AWACS and the Nimrod early warning system. What is the position there? We should like to know whether our contribution will go to the United States. The Secretary of State said that it was a NATO decision but, with the greatest respect to my right hon. Friend, I fancy that it will be an American decision, because AWACS is based on the American Boeing.
  I turn to the question of alternative work. I do not know how many hon. Members have actually looked at the corporate plan to which reference is made in the amendment. It is worth reading. It is not just a pie-in-the-sky, airy-fairy idea, which has come from some workers who are not, perhaps, intelligent enough to know what it is all about. It has been thought out, mulled over and examined by the workers in these industries and by others who have assisted them over a long period. The summary runs to 26 closely argued and highly technical pages. The full plan includes five sections of 200 pages, also very closely argued and technical, and showing that the workers have done their job. It deals with actual proposals for which feasibility studies have been done.
  These proposals include developing a hybrid system connecting internal combustion engines to a generator for use in battery-powered road vehicles; it proposes to look further into the development and use of airships; it suggests that the money that Lucas Aerospace spent 10 years ago on developing a railway actuator should be re-examined to produce a vehicle suitable for being taken directly from a railway to a conventional road surface; there are ideas for components for low-energy housing; there are proposals for further developing the industrial ball screws for which Lucas was once famous; there are proposals for producing kidney machines, which would be of great social and medical benefit and would have a large export market. It is an exciting document, worth reading, and I commend it to hon. Members.
  Mrs. Knight: Has the hon. Lady, in this context, considered the pool of unemployed that we have already who are not able to find work of any kind? Is she considering that as an aside and going on to transmogrify the present
  1528
  situation in the defence industries, or what?
  Miss Richardson: I should be pleased if we could develop some of these other industries, too. Some of the products suggested are not confined to conversions from arms in the form I have mentioned. I believe that we should be developing new industries and new products. If that is the point that the hon. Lady is making, I agree with her. I am glad that she supports us in wanting to do something about our pool of unemployed.
  We recognise, however, that this scheme could not be done overnight. We are asking the Ministry of Defence, the Department of Trade, the Department of Industry and the Department of Employment to look closely at this plan to see exactly what can be drawn from it and what help can be given.
  Mr. Victor Goodhew: The hon. Lady appears to be concentrating only on defence industries. Does she not recognise that many of the redundancies in the past have been among Service men? How many Service men has she talked to about these proposals?
  Miss Richardson: I have discussed the proposals with individual Service men. I, too, wish as many of them do, that they were able to become members of a trade union, so that in the Labour movement we could discuss these things with them. Of course I am not in favour of increasing unemployment from the Armed Forces. I would prefer to reduce defence spending by changing our nuclear strategy, perhaps, in the first instance, rather than by reducing the numbers in our Armed Forces. I agree that we must maintain the Armed Forces, but I also believe that there are many members of the Services who would be happy to do a peace-time job, if they could get one in this day and age. Of course we must plan carefully for phasing out from the Armed Forces. I know Service men who have joined the Armed Forces because they were unable to find a job in civilian life. That is a wrong way for us to go about it.
  Could consideration be given, in the whole context of our discussions about defence, to getting more information out of the Ministry of Defence? In studying the last two White Papers, I have found that what is wholly undesirable about

  1529
  them is the incomplete information they give, the vague and meaningless phrases which they contain. For example, the last White Paper mentioned Polaris in only two short comments in one chapter. One comment was about maintenance and the other was about naval bases. In another chapter, we were told that Polaris submarines
  "provide a continuous patrol as the United Kingdom's contribution to NATO's strategic deterrent".
  I find that very explanatory. In another revealing comment, the White Paper said that
  "The effectiveness of this force will be maintained."
  What kind of information is that to be given to the House of Commons and the public?
  Both phrases I have quoted are based on reasonable assumptions. They have been known for the last decade. What we want to know is the specific strategic rationale for the Polaris force, the kind of improvements which may be necessary to it, or perhaps the cost of those improvements, the reasons for the two new nuclear tests we have recently carried out, whether there is any forward thinking about replacing Polaris or doing without it. If it is said that we might be doing without Polaris in 10 or 15 years' time, why cannot we do without it now?
  Other countries, including the United States, are giving more and more information. The scant information which comes from the Ministry of Defence reminds me of a joke about a Government Minister who was invited on a trial flight of a new hot-air balloon. After a little while, the balloon got lost. The pilot dropped it down to find out where they were, and they found themselves flying low over a field. They passed over two labourers. The Minister leaned out and said to them "Where are we?" One of them looked up and replied "You are in a balloon." The Minister thought about this for a while and then said "That is a perfect reply to a Parliamentary Question. It is short, accurate and gives away no information at all." That is the kind of reply which we have all too often had from our Front Bench—from the Ministry of Defence and the Foreign Office in particular—about our
  1530
  strategy and our foreign policy, and it is time we had very much more information.
  I repeat our hope that the Government will think carefully about their defence strategy. In addition to the points that have already been made in the debate, I hope that they will consider very carefully the fact that there is a serious and considerable body of opinion, not just in the Labour movement but in the general public, which feels that there is an inordinate concentration of our wealth and talent on defence and armaments, which should be put to more socially useful things.
  8.20 p.m.
  Mr. Geoffrey Pattie: I thought it would be quite some time before I found myself able to agree in any way at all with the hon. Member for Barking (Miss Richardson), but as regards the amount of information provided I have some sympathy with the hon. Lady's point of view.
  It is rather ridiculous that we should be having a debate on as critical a matter as the defence of the country without more information. It is rather like an exercise in shadow boxing. In addition to the customary Government secrecy to which we are normally treated in all departmental matters, we have the extra refinement that any statements about defence matters would be injurious to the security of the realm.
  I suspect that if we knew how serious the position really was we would probably wish to meet in camera and have the debate in a Committee Room upstairs. I was given some information this evening from an active source that is so serious that I do not feel that I can pass it on to the House.
  The Ministry of Defence should be far more relaxed about questions, particularly if it is worried about what the Soviet Union might know. I do not think there is anything worth while that the Soviet Union does not know already. Next time we want a full briefing, we could do worse than go along to the Soviet Embassy and get briefed there about Britain's defence capability.
  What tends to happen is that information emerges piece by piece. We find that there are to be cut-backs on maintenance that will mean a reduction in the number of serviceable aircraft. One

  1531
  has also read in the newspapers—yesterday and this morning—about economies in ships and that our ships will travel slower. The Government simply cannot go on with this process, for one reason if for no other. I am probably wasting my time putting this point to the Government, but I shall do so none the less because of the rather cavalier way they have treated the Services in previous cuts. It is totally immoral that any Government should provide the Services with certain tasks yet not provide them with the means to carry out those tasks. That is the situation with which we are now faced.
  Hon. Members below the Gangway on the Government side who support the amendment know that perfectly well. But they do not really mind, because once we get past this particular series of cuts they can demand that if a certain task is not being carried out it should be abandoned. That is the next logical step. One gets to the stage that, when part of the Armed Forces ceases to be viable or able to do the task with which it is charged, it becomes more vulnerable to attacks from Labour Members below the Gangway who might say "We might as well get rid of this group because it cannot do the ".
  One cannot over-emphasise that in present circumstances, should there be any form of confrontation in the near future, there will be no time for us to come in from Civvy Street and put on flying suits. We are talking about a highly technical environment. We are talking about a possible war of two or three weeks' duration. We shall not have time to say "We shall be able to make good once we see how the situation is deteriorating".
  The analogy with the police is a sound one. That might explain why Labour Members below the Gangway do not care for them either. If, for example, the hon. Member for Salford, East (Mr. Allaun) should have his home broken into or be attacked in the street, he would expect the police to be on the scene pretty fast. The hon. Gentleman would not want to be told that police cars were travelling slower because they were economising on fuel or that two police cars were on duty rather than four because of a maintenance drive.
  1532
  The right hon. Member for Down, South (Mr. Powell) rightly drew our attention to the assumption by this country of our responsibility for 200 miles of territorial waters. In that context I feel that the analogy with the police is totally sound. Members of the Labour Party would immediately call for adequate naval cover for their constituents who were manning trawlers and also for the arrest of any foreign trawlers fishing illegally.
  I well remember that during the invasion of Cyprus in 1974 two Labour Members called for a British military involvement and shortly afterwards voted for defence cuts. They took the view that the British forces should be there doing a job with no questions asked.
  Hon. Members opposite would no doubt call for urgent Royal Navy and Royal Marine support for any of their constituents on oil rigs who had been menaced by some hazard. But they should be aware that the Royal Navy might be required for urgent intervention due to collisions, wrecks, sabotage, oil slicks and search and rescue.
  With all those tasks, we must give the Royal Navy the means to carry out its rôle. It is heaping folly on folly to provide the Royal Navy with equipment—I am talking about the new Ireland class—that will be manifestly unsuitable for the job. Everyone, apart from the Ministry of Defence, seems to agree that this will be the case. This class of vessel will be too slow. It has no helicopter capability and it costs £2·6 million per vessel.
  If we are to pay that sort of money, let us get it right. The irony is that we are designing and producing a vessel that we are selling to the Mexican Navy, known as Azteca, which is perfectly suitable for the task.
  I wish to concentrate my remarks on the Royal Navy. In strategic terms, we must support the Royal Navy in order to protect the sea lanes along which comes so much of our food and raw materials as well as reinforcements from the United States to support the northern and southern flanks. Speaking of the southern flank, I hope that the Minister of State can refute the suggestion made in one of the daily newspapers earlier this week that the Secretary of State's

  1533
  visit to Cyprus could be the precursor of a British withdrawal from that island.
  The calibre and quality of our forces are, in my observation, as high as ever. They are as professional as any forces anywhere in the world—in fact, better than most. They are so inadequately supported with regard to equipment and training, however, that General Brown, of the United States, was correct when he described their capability as "pathetic". As for the northern flank, NATO exercises in the last few months have shown, if we needed any proof, that our ability to reinforce Norway is so totally inadequate as to be virtually Gilbertian. This has made the British guarantee to the northern flank a laughing stock.
  My hon. Friend the Member for Peters-field (Mr. Mates) was right to look at the challenge facing the Royal Navy and the opportunity which will be offered to a new Conservative Government to look at the right mix between larger and smaller ships. No one can say when and from where the next challenge will come. There could be any manner of threat in the seas round our shores, and we can speculate how long in terms of weeks or days we could survive a blockade by the Soviet navy. There could be any form of diversionary activity designed to distract attention from the increasing civil discontent and unrest in the Warsaw Pact countries. There could he a thrust into Yugoslavia after Tito's death.
  Whenever and from wherever the challenge comes, and if there should be hostilities—which heaven forbid—this Government will stand convicted before the bar of public opinion as having been guilty of criminal neglect by encouraging our enemies to believe that they could attack us without suffering the consequences.
  8.30 p.m.
  Mr. Robin F. Cook: The hon. Member for Chertsey and Walton (Mr. Pattie) made a very amusing reference to my hon. Friend the Member for Salford. East (Mr. Allaun) awaiting police assistance and a police vehicle failing to arrive because of lack of fuel. I cannot resist making the comment at the outset of my remarks that last month the local authority in my con-
  1534
  stituency met to consider the cuts before it as a result of the Government's restrictions on local government expenditure. One cut which it was asked to approve at that meeting was precisely a 10 per cent. cut in police vehicle mileage in order to economise on fuel.
  That provides me with a neat introduction to my speech, because I have been amused—if that is the right word—by the repeated attempts of the Opposition to put the blame for the cuts that we face on Members of the Tribune Group and those who signed the amendment, as if it were we who were responsible for the economic package, including these cuts, which we debated shortly before Christmas. Political memories may be short, but the right hon. Member for Chesham and Amersham (Mr. Gilmour) cannot have forgotten that when the House debated those cuts it was we who voted against them. I do not know the degree of paranoia that the Opposition have developed. It may be that they believe that we were acting out a cover life to conceal the fact that under instructions from the Kremlin we had written the speech of my right hon. Friend the Chancellor of the Exchequer. But the fact is that we voted against that package, and I do not remember seeing the right hon. Member for Chesham and Amersham in our Lobby that night.
  If anyone is to blame for this package of cuts in defence expenditure—assuming that blame has to be attributed to anyone—it does not rest so much with my hon. Friends as with those who, in the preceding two or three months, repeatedly demanded cuts of £4,000 million, £6,000 million and £10,000 million in public expenditure.
  It is the most deplorable cant for the Opposition to demand cuts in general public expenditure and then to squeal when they hit the one area about which they care. When the last Conservative Government faced the reality of having to cut public expenditure, they cut defence expenditure. If they were in office now and were cutting public expenditure, they would cut defence expenditure, too. I do not know anyone outside this House who is daft enough to believe that it is possible to cut public expenditure without cutting defence, or that it is possible to reduce the number of

  1535
  civil servants without attacking the Ministry of Defence, which is one of the largest employers of civil servants.
  If we consider Britain's expenditure on the social services, on education and on health and we compare it with the position abroad, we see that it is not out of line with our European competitors. We see that the majority of members of the EEC spend more of their gross national product on these services than we do. It is only on defence that we spend a significantly higher proportion of our GNP than any other member of the Common Market. This means that if it is accepted as economic policy—and we do not accept it—that a cut in public expenditure is essential, inevitably it will produce cuts in defence expenditure.
  There is another general matter to which I draw attention at the outset of my remarks. A number of hon. Members on both sides of the House have said that one feature of this round of cuts which they dislike is that they are short-term, disruptive and damaging. I accept that there is some validity in that criticism. Obviously it is difficult to make sensible cuts in expenditure for the next financial year having been told about them in January or December preceding the start of that financial year. Yet those of us who have signed the amendment have argued for the last two or three years that we should take a long-term view of defence expenditure and attempt to reduce it in line with our economic base and our economic ability.
  I look back to the first debate on the defence review nearly two years ago, when an amendment in similar terms to the present one was moved. It was precisely a future series of short-term, damaging cuts which I prophesied in moving that amendment, and that is precisely what has happened. There have been five successive cuts in defence since that debate two years ago because we failed then, in the defence review, to reduce our defence expenditure in line with our economic base.
  We cannot claim credit solely for the Tribune Group in predicting the present position. It will be remembered that two years ago we had before us a report from the Expenditure Committee in which it was said:
  "The Committee would also draw attention to the very serious implications for future
  1536
  expenditure if the Ministry of Defence continue to base their forward approach on an unrealistic projection of the growth in the gross national product."
  Hon. Members will remember that the prediction of growth in the GNP on which the review was based was 3 per cent. a year. But of course we did not have a growth of 3 per cent. or anything like it—partly because we failed to reduce defence expenditure in order to release resources for manufacturing industry. Our failure to achieve that rate of growth has meant that the prophecy of the Select Committee has come true. There have had to be further cuts in defence expenditure to bring it into line with what we have actually achieved economically.
  I take on board the point made by the right hon. Member for Down, South (Mr. Powell). It is high time that we got beyond debating defence in terms of a global budgetary total. It is interesting, and a rather sad reflection on this House, that in the whole of today's debate since it was initiated only one hon. Member has actually referred to the precise cuts outlined by my right hon. Friend in opening. That hon. Member was my hon. Friend the Member for Bristol, North-West (Mr. Thomas), who alone referred to what is actually involved in the cuts before us.
  If one looks at the cuts that have been announced one has difficulty in accepting them as being the kind of drastic inroads into our capability and our contribution to NATO which some hon. Members have suggested. The largest single figure that the Secretary of State mentioned was £80 million, which is achieved by delay in ordering equipment, and the only individual piece of equipment to which he referred was AWACS. But there has been a NATO decision not to go ahead on that, so even if the Secretary of State had wished to go on with it he could not have spent any money there. That cut is clearly illusory.
  We must get away from the way in which we have been handling our defence policy over the last two years, in which we have had short-term cuts and have then looked at the budget and found areas where there has been under-spending or a contract which has not been fulfilled, and have announced that as a cut in the defence budget. We must take up the point made by my hon. Friend

  1537
  the Member for Hornchurch (Mr. Williams) and look at the weapons, and scrutinise our weapons systems and the strategic doctrine underlying our weapons policy. I have considerable sympathy with the points that my hon. Friend made about using precision-guided munitions rather than manned aircraft to back up protection of our airspace, and using rather smaller ships to protect our fisheries and offshore patrols—which seems to be the main rôle of the Royal Navy in the future—rather than laying down large through-deck cruisers, as we are doing at the present time.
  Mr. Alan Clark: Surely the whole point of the defence review was that this scrutiny was applied in the most far-reaching, searching and thorough manner. What does the hon. Member want to reintroduce?
  Mr. Cook: There is no dispute between the hon. Member and myself. If the hon. Member goes back to the 1974 debate and reads the speech I made then he will see that I said that there had been no scrutiny of defence, and there had been no vision of the way in which foreign relations were developing. Also, we failed to take on board a number of predictable points, such as the extension of the fisheries limit to 200 miles.
  I am aware that there are many other hon. Members who wish to speak, so I shall limit my remarks. I want to draw the attention of the House to one point which has not been given adequate attention, but first I wish to take up the point made by my hon. Friend the Member for Bristol, North-West, on BAOR and the cost of foreign exchange. I was particularly heartened to read an article in The Guardian last month which said that the Secretary of State, on taking office, had called for a paper which he wrote in 1967 pointing to the enormous foreign exchange costs of BAOR.
  If my right hon. Friend was concerned about it in 1967 he has every right to be even more concerned about it in 1977. In 1967 the total cost to us of BAOR, in foreign exchange, was £94 million, for which we received an offset of £77 million, leaving a net balance of £17 million. Last year, for which figures are available, the foreign exchange cost was
  1538
  £403 million, for which the offset agreement was for £40 million, leaving a net cost to us in foreign reserves of £363 million.
  In the current year the total foreign exchange cost is £500 million and there is no offset agreement at present. Every penny of that sum is a net loss to us in foreign exchange. It is nonsense that the country in Europe with one of the most severe balance of payments deficits should be making that kind of contribution to the country in Europe with a high balance of payments surplus.
  When other countries run up against this problem they are not so squeamish in taking action to protect their own interests. France, for example, only four months ago withdrew 10,000 troops from Germany because the Germans had failed to come to an agreement about the cost of new barracks for them. There appeared to be no anguished debate in France, and no Chiefs of Staff calling on the Prime Minister. In particular, there was no reference to the effect that such a decision might have on the multi-lateral talks in Vienna on force reductions.
  I emphasise that point. In the three years that I have been in this House every time we have debated defence or mentioned BAOR, almost inevitably the Minister has responded with bipartisan support by claiming that we could not touch BAOR because of the talks in Vienna which were aimed at reducing the number of troops in Europe. Yet in those three years I do not think we have once debated the talks, what our strategy at them should be, or what policy we should be adopting there. What has been the effect of those three years of negotiation? At the end of that period the NATO side has tabled new figures, up-dating the figures it originally tabled, which show that there has been an increase in the number of troops in Europe on the Western side.
  Some of us are beginning to suspect that that was precisely why the talks were set up, and there are one or two quotations I could give which buttress that suggestion. There was an interesting quotation from Mr. Louis Michael, who is director of the American Defence Department's MBFR Task Force. He said:
  "Our MBFR position is structured especially to attack"—

  1539
  the disparity between East and West, but
  "Essentially, we are … applying MBFR, or participation in MBFR, in support of the basic objectives … namely, strengthening of our conventional defences, and getting our Allies to do more in terms of supporting their share of the burden."
  In other words, there were some who from the outset saw the talks not as a means of reducing troop levels but of maintaining them, and in that they have been very successful.
  If we are told that we cannot cut BAOR because the talks are going on, the least we are entitled to expect is for some action to be taken by the Government, following discussion in this House, to break the deadlock and the log jam that has built up in Vienna so that these talks secure some success. I believe that we shall have to accept national sub-ceilings rather than simple Alliance totals, which is our present position. Our present position of refusing to accept national sub-ceilings appears to be held because we do not wish to give the Russians any right to control the number of troops in the West German Army.
  Let me refer here to the hon. Member for Aldershot (Mr. Critchley) who mentioned the remarkable growth of the West German forces, which is the biggest single difference in the strategic balance in Central Europe over the past decade. I see no reason why any hon. Member concerned with the future of Britain should be reluctant to take the chance, through national sub-ceilings negotiated in Vienna, to put a full stop to the growth of West German forces. I offer that as my modest contribution to the debate in Vienna.
  Whether that approach or some other approach is adopted to break the deadlock, the important fact is that unless the deadlock is broken, unless there is a sign of progress in Vienna, it is inevitable and perfectly proper for us in Britain to say that if we cannot make progress multilaterally we must reassess our own contribution and see whether it is in line with our capacity. After all, Britain is still the second largest naval Power in NATO. We still make the second largest contribution to the naval forces of the Alliance. Does that make any sense, in terms of the relative distribution of wealth and shipbuilding capacity in the Alliance? Or if
  1540
  we are to continue to play that rôle, can we also afford a contribution to both the land battle and the air battle?
  If we continue to attempt to be a first-class military Power long after we have ceased to be a first-class economic Power, the attempt is doomed to failure. The very attempt will put such a burden on our economy that we will be unable to strengthen our economic base in the way that is essential if we are to meet the military ambitions of Opposition Members or the social service ambitions of Labour Members.
  8.47 p.m.
  Mr. Robert Banks: Many hon. Members have referred to the defence review of 1975. I doubt whether the Government have taken any steps since that review which have done more than the present cuts to dissolve respect and lose the confidence of those overseas or at home. That was the most thorough review of our defence pattern and posture. It set the plan for the next 10 years and a great many people, certainly everyone in the Services, felt that there was at last some hope that they could look forward to a period when they could plan decisively and with some assurance that their plans would not be deflected. Since then there have been many other cuts.
  I condemn what the Government have done in shattering the hopes and plans not only of our own forces but those of our allies. I condemn even more heartily the way in which the Government have carried out the cuts which have been made since that review. I wonder what picture we present to nations abroad. We are grappling with economic problems, having undertaken a thorough review of our defence forces, but the Government still go on chipping away at our defences, a matter which profoundly affects the responsibilities which our allies in NATO have to shoulder as a consequence. Defence is an integral part of our foreign policy. We should not underestimate the effect that speeches in this Chamber have in other countries. What we do in defence has an effect on foreign policy and certainly has an effect on what other countries think of us.
  The cuts which face us today are yet another example of Left-wing influence over the Government. They are designed by the Government only to enable them

  1541
  to remain in office. There are Members on both sides who know that this is true. The defence needs of our country should be outside politics. We should be able to have a free debate to decide our commitment in terms of manpower and armaments to meet the threat posed by a potential aggressor.
  I greatly respect the hon. Member for Liverpool, Toxteth (Mr. Crawshaw), who today brought into our proceedings some of the spirit of what Parliament should be. He is a man with deep convictions who will stand up and vote against his own party for what he believes is right.
  Mr. Litterick: Like members of the Tribune Group.
  Mr. Banks: The visit of the Chiefs of Staff to the Prime Minister was historic, and it is no use pretending that it was otherwise. They went with the purpose of trying to deflect the Prime Minister from going ahead with the cuts. We know that they were unsuccesful, and that is a tragedy not just for them and for our Armed Forces but for the whole country. Their anxiety has proved justified.
  I understand that the Chiefs of Staff even took the Secretary of State with them. He presents a sad figure today. I regret that in the time leading up to the Cabinet decision to make the cuts there was no whisper of a resignation or suggestion by the right hon. Gentleman of throwing down the gauntlet and saying that there had been enough cuts and that the Services could take no more.
  One small cut has received publicity in the Daily Mail today. The memorandum sent to the Navy about the need to restrict fuel is a small matter, but I am glad that the Daily Mail reported it on the front page. The paper should be commended for doing so. My right hon. Friend the Member for Chesham and Amersham (Mr. Gilmour) referred to the memorandum, and one of my hon. Friends at least received an honest answer to a question when all the consequences of the proposal were spelt out.
  I accept what my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) said about the need for speed in passage, but I served my term of National Service in the Royal Navy, where we were taught first about
  1542
  the need to find, search out and kill the enemy at the fastest possible speed and, secondly, the need for one to look after the safety of one's own ship.
  The first essential is that the man in the operations room of a ship must not be hindered by restrictions which might affect his mental processes and hold him back from taking the fastest possible action. This was discussed in the Navy many years ago and it was agreed that fuel restrictions would affect captains psychologically, whether they were aware of it or not, when they had to make decisions about which course to take and at what speed to travel. Captains would feel restricted by the need to conserve fuel and this factor at the back of their minds would make them act with a natural caution. It is a fundamental mistake to make such cuts; we must use our ships to the maximum possible advantage.
  Our worldwide rôle has gone, but I do not like to hear the insidious way in which some Labour Members refer to our old rôle as an international Power. It is fatuous for them to say that some hon. Members on this side still seek a rôle wider than any we could imagine for ourselves now. That is in the past; it was a different age.
  What a different picture we now present abroad. Once we were respected as a nation which undertook the responsibilities of other nations in the search for peace. Now we are seen as a country which is begging and borrowing. How pathetic we must seem to nations which remember our past—a past which Socialism buries in earnest and with relish. Some Labour Members opposite scorn our triumphs. They forget that many lives were lost while we were seeking to bring security to the world.
  The country deserves a better Government. We should be able to manage our economy. We are an intelligent people. We have a sophisticated industrialised society. We have a wealth of experience and a wealth of history behind us. We have people of immeasurable talents. There is great respect for this country, yet we are in such a sorry mess. In the past two years we have rushed into decline. That is because we have a Government who are governing under a mistaken philosophy and not with the will and understanding of all the people.

  1543
  It is with those home truths in the background that we know that our defence has now been withdrawn to NATO. I accept that there is no alternative but to consolidate our forces within NATO, but I do not accept that we should ignore the rest of the world and not be concerned with what is going on in it. What happens in Africa or the Middle East is of fundamental importance to Europe and to peace. I should like to see a widening of the NATO perspective so that we have forces at our disposal to use outside the areas of the NATO Alliance. It is our task to counsel NATO on those lines and to use our counsel within the partnership of the European Community to ensure that we have a common foreign response to events as they occur and as they threaten peace and security.
  The Secretary of State gave us the impression that by concentrating and maintaining our contribution to NATO we are all the more secure. I am deeply concerned about the shape of the defence forces at our disposal as a result of the succession of cuts that have taken place. The picture is not a happy one. Our Navy has increased responsibilities for fishery protection without the proper ships to do it. The frigates now patrolling the 200-mile limit are sophisticated, lethal weapons. They are now being worn by chasing up and down looking for foreign trawlers illegally fishing. These are the ships on which we depend for defence. If we are to operate them effectively, their crews must be trained to peak efticiency in operation through training and exercising. The fact that they are now engaged in a different sort of task creates a weakness within the defence capacity of the Royal Navy.
  We are short of ships. I have no doubt that we are short of a great many ships in different areas—for instance, minesweepers and patrol vessels. We now have no commitment to the Mediterranean and the southern flank of NATO. When we talk about our contribution to NATO, we must not forget that we contribute nothing in the way of ships on permanent station in the Mediterranean and that we have a weakness in the Northern Approaches as well.
  I suspect that we are short of Nimrod reconnaissance aircraft and helicopters and anti-submarine warfare helicopters.
  1544
  The Under-Secretary of State for Defence for the Army is complacent about our reserve forces. We all know that recruitment is up, but what about establishment and the number of reservists that we should like to see trained so that they can buttress our forces stationed in Germany and be available in time of emergency?
  Our forces in Northern Ireland are doing a most remarkable job but they leave a weakness in NATO because of their operations and lack of training. I am deeply concerned about the amount of ammunition that is available to the forces for training. If we watch a Western movie on a Saturday night, we probably see far more shots fired as we look at our television screens than a battalion fires in one year in practice training. Our commandos are doing excellent training in Norway for snow battle, but we need to be able to get them to those areas quickly. It is no use putting them through a training commitment when we do not have the means to get them to the area where they are desperately needed when the gauntlet is thrown.
  Our men in the forces are still the finest in the world. I bow to them for their remarkable tolerance in being messed around with these continual cuts that threaten their employment and their future, cuts which they know are threatening the safety of the country.
  9.0 p.m.
  Mr. Churchill: Extreme concern has been voiced in all quarters of the House today about the latest Government cuts in defence expenditure. That is not surprising, for as long ago as 18 months the then Chief of the Defence Staff, Field-Marshal Sir Michael Carver, publicly declared that Britain's Armed Forces were down to "absolute bedrock". In the past year our Services have suffered cuts totalling a further £1 billion. In the financial year 1977–78 that means a net cut in planned defence expenditure of nearly £1 billion, rising the following year to £1·2 billion—a reduction of 18·4 per cent.
  The Secretary of State for Defence, in his robust speech this afternoon, made a remarkable revelation—I hope that it was noted below the Gangway—namely, that for every £10,000 cut from the defence budget one job is lost. I do not think

  1545
  that message has yet permeated through to Mr. Len Murray or Mr. Hugh Scanlon. At the present rate of defence cuts of £1 billion a year over the next few years, we are talking about 100,000 jobs being destroyed by this Labour Government since they came to office. Put against the Government's much-vaunted job creation programme, we see that they are destroying 100,000 jobs.
  There can be no question of these cuts being absorbed, as has been suggested. They will inevitably mean a significant cut in Britain's military capability and commitments. The Government have sought to justify previous cuts on the ground that we must liquidate the relics of our imperial past and concentrate on NATO as the linchpin of our defences. I do not dissent from that judgment.
  The hon. Member for Liverpool, Toxteth (Mr. Crawshaw), in a most courageous speech, made it clear that we need defence expenditure to prevent, not to create war. The hon. Gentleman pointed to the fact that our part within the NATO Alliance has contributed to 30 years of peace. We diminish that contribution not only at our peril but at our children's peril.
  It is crystal clear that last year's defence cuts amount to a running out on certain of our commitments to NATO. The Secretary of State for Defence has been unwilling to come clean on this matter. But is impossible to dig down below the bedrock without reaching a critical level in our defences.
  It was particularly odious that, on a previous occasion at the Dispatch Box, the right hon. Gentleman should seek to dissociate himself from his defence team by declaring that they could speak for themselves. That statement he knew to be untrue. We are glad that he has retracted it today.
  Why is the Secretary of State keeping the views of the Service Chiefs concerned secret from Parliament? Surely not on grounds of national security, because no secret is involved there. The only basis on which the information is being withheld is the least justifiable reason of all—to save the Government from extreme embarrassment.
  I strongly endorse the call made by my hon. and gallant Friend the Member
  1546
  for Winchester (Rear-Admiral Morgan-Giles) to let the Service Chiefs appear before a Select Committee of this House in order that they may speak for themselves to the elected representatives of the people and not have their protests swept under the carpet in a shoddy, offhand way which will not commend itself to this House.
  Mr. Cronin: Can the hon. Member remember any occasion in history when the Service Chiefs, whilst still serving, have expressed opinions that are contrary to those of their Ministers?
  Mr. Churchill: I say that the action of the Service Chiefs in jointly seeking a special interview with the Prime Minister is unprecedented in peace time since before the last war.
  Mr. Mulley: The hon. Member must have some regard to the facts. Earlier I gave him three dates, which I stand by. They are 1965, 1968 and 1970. It is not in any sense an unprecedented event.
  Mr. Churchill: It is not without significance that all three dates to which the Secretary of State alludes were when a Socialist Government were in power. I shall not withdraw what I said, because I am bound to say to the Secretary of State that this is the first time that all the Service Chiefs together have sought the right of this special access to the Prime Minister.
  My hon. Friend the Member for Harrogate (Mr. Banks) said that above all this was a decision on party political grounds. There can be no doubt about that. The Secretary of Defence and his colleagues appear in such a bad light because the Service Chiefs are seen to be representing the national interest—which is their duty—while the Government are failing to represent the national interest and have regard only to party political interests below the Gangway.
  Mr. Fernyhough: In 1950 and 1951 we were told that the Russians would sweep across the Channel ports in 48 hours if we did not have a big rearmament programme. Since a Labour Government started that rearmament programme in 1950, and since the distinguished grandfather of the hon. Member for Stretford (Mr. Churchill) substantially cut defence in 1953, when the Red menace

  1547
  was still supposed to be with us, how can he justify criticising us for doing the same?
  Mr. Churchill: I am grateful for the opportunity to pay tribute to the great service that Clem Attlee did for this country in his robust approach to defence, whereby, keeping most of his Cabinet colleagues in the dark, he went ahead with the programme to develop Britain's nuclear weapons. It is absolutely true that my grandfather cut defence. As the right hon. Member for Jarrow (Mr. Fernyhough) and his hon. Friend the Member for Salford, East (Mr. Allaun) know, we were coming to the end of the Korean war and there was no massive Soviet military build-up in Central Europe.
  Mr. Michael Stewart: The hon. Member for Stretford (Mr. Churchill) said that Clem Attlee kept his colleagues in the dark over the development of nuclear weapons. That is often said, and is totally untrue. If the hon. Gentleman consults Hansard for May 1948 he will see that the fact that the Government were developing nuclear weapons was stated in Parliament for anyone who was interested to hear.
  Mr. Churchill: I am delighted to have that reassurance. I was referring to the initial stages of the decision to develop nuclear weapons. I accept that later on in the period of the post-war Labour Government this became public knowledge and was the policy of the Government as a whole.
  My hon. Friend the Member for Torbay (Sir F. Bennett) asked what Tory policy is. Tory policy in defence matters is to reverse the disastrous trend of recent months, of cutting on a totally arbitrary basis the support that our troops are getting. We are committed not only to not further reducing the expenditure on defence but, indeed, to restoring cuts whenever necessary to deal with identified areas where we are not fully protected in regard to our national interest.
  Unilateral disarmament is unwise at the best of times. In the face of a growing threat, it is utter folly. The Secretary of State is by no means unaware of the threat; indeed, he was
  1548
  party to the communique released on 8th December last year following the ministerial meeting of the NATO Defence Planning Committee in Brussels, at which—I quote the statement—
  "Ministers … reaffirmed their support for the Western position in the Vienna negotiations and the importance they attach to the principle that NATO forces be maintained and not reduced except in the context of a Mutual Balanced Force Reduction Agreement."
  That notwithstanding, within one week further unilateral cuts were announced by the Secretary of State for Defence. One is bound to ask whether the Secretary of State actually saw the terms of the communique before it was issued in the names of himself and his colleagues, and whether he stands by those terms. Perhaps the Minister of State would kindly inform us of that when he makes his winding-up speech.
  With Soviet naval power in the Mediterranean rivalling that of the United States today, the continuing political differences between two NATO Allies—Greece and Turkey—over Cyprus remain a matter of concern. Even if the Cyprus bases did not have military significance, including their significance as a counter to growing Soviet naval presence in the Mediterranean, it would be wholly unacceptable from a political angle if, as a result of the defence cuts, the British Government were to consider abandoning the Cyprus bases, with all the instability and acrimony between Allies to which that would give rise.
  However, it is above all on the northern and central fronts of NATO, where the Soviet Union confronts the Western democracies, that the situation has today become so serious. Leaving aside all Warsaw Pact forces, the Soviet Union today confronts Western Europe with the greatest army ever seen in peace time, comprising more than 100 divisions with a manpower of more than 1¼ million men, backed by an armoured force of more than 25,000 tanks. Sixty per cent. of these forces are described as Category 1—in other words, Permanently kept in a high state of readiness.
  NATO forces, excluding the Mediterranean countries of NATO but including France, find themselves outnumbered by a ratio of 1·5 to 1 in manpower and 2·5 to 1 in tanks by the Soviet Union alone.

  1549
  However, it is not only on the ground but in the air that the balance is increasingly going against us. Including all the tactical air power that the United States and the Soviet Union are likely to deploy in the European theatre, there is an adverse air balance against the West of about 2 to 1–7,500 Soviet aircraft versus 3,750 on the NATO side.
  If this conventional imbalance does not provide grounds enough for alarm, the remorseless build-up of momentum of the increasing Soviet defence budget—which the Secretary of State told us today was growing, in real terms, at 5 per cent. a year—and of armaments, production most surely does.
  It was announced in the communiqué following the NATO meeting early last month that
  "The Soviet Union is currently estimated to be spending about 13 per cent. of its gross national product … for military purposes, which is a very much higher level than obtains in NATO generally."
  The Soviets are today spending approximately three times the average 4·8 per cent. of GNP of NATO countries, including the United States. Since 1968, United States defence expenditure has dropped by one-third, while Soviet expenditure has been increasing, on average, by 3 per cent. a year, and is now increasing more rapidly.
  The fact is that the Soviet Union is outspending the United States by 40 per cent. at present and, because it devotes only half as great a proportion of its defence budget to the pay and pensions of its forces, it is in effect today spending twice as much as the United States on research and development as well as on the procurement of new armaments—a fact which I am sure is calculated to cheer the heart of the hon. Member for Salford, East.
  Mr. Frank Allaun: Will the hon. Gentleman, whose speech has confirmed our view of him as a Right-wing extremist—I am speaking as a moderate myself—tell the House that the figure he has just quoted, of a 40 per cent. excess of Soviet expenditure over that of America, came from the Central Intelligence Agency in a document yesterday? As Mandy Rice-Davies said in another context, "They would say that, would they not?"
  1550
  Finally, will the hon. Gentleman tell the House what would satisfy him as an increase? I suspect that even if our arms expenditure were trebled and the country completely bankrupted he would still be demanding more and more expenditure.
  Mr. Churchill: I am afraid that, unlike the hon. Gentleman, I am not privy to the CIA document to which he referred. Though recognising that he has a high regard for the efficiency of totalitarian production east of the Oder-Neisse line, I am bound to say that the sheer volume of hardware that is coming off Soviet production lines is sufficient evidence in itself of what the Soviet Union is putting into defence today.
  I shall refer briefly to that production, because to many people it is the single most worrying fact about our present position in the West. While United States tank production over the past five years has averaged less than 500 a year, that of the Soviets has exceeded 3,000. It is likely that the Soviet Unioin will be producing between 3,000 and 4,000 of the ultra-modern T72 tanks in the course of this year. At an average production rate of close to 300 per month, the Soviets are out-producing Britain's entire inventory of 910 Chieftains every three months, according to the Institute of Strategic Studies' "Military Balance", and out-producing the United States tanks in Europe, which amount to 2,500, every eight months.
  The Soviets are building more than 1,000 supersonic tactical aircraft, leaving aside all their bomber aircraft such as the Backfire. These are ultra-modern supersonic tactical aircraft—Flagons, Fencers, Fishbeds, Floggers and Foxbats. At an average production rate of 85 per month, they are reproducing Britain's entire inventory every two months, our inventory being 192 supersonic aircraft, according to "Military Balance", and every two years they are reproducing all 26 wings of the United States Tactical Air Command.
  In medium and long-range missiles the situation is even more worrying. The Soviets are believed to be deploying their missiles at present at a rate of 250 a year, with more than 800 warheads—a figure likely to rise very sharply as the new Delta I and 2 submarines which

  1551
  have been launched in the past 18 months are equipped with the newer MIR Ved missiles. At this rate of deployment the Soviet war machine is reproducing Britain's entire inventory of missile warheads, which is 64, every four weeks.
  What is the purpose of this terrifying rate of arms production, unprecedented in any nation in peace time, including Nazi Germany in the years leading up to the outbreak of war? I do not pretend to know the answer, but the Secretary of State gave us his version. He said that it was part of the deterrent policy on both sides. Deterrent against whom? Of whom in NATO has the Soviet Union to be afraid? Perhaps the Minister of State will tell us what his right hon. Friend has in mind.
  However, I do not share the excessive pessimism of those who believe that the Soviet Union is hell-bent on the path of war with the West, or that its leaders have concluded that, as a result of their massive investment in civil defence in factories and apartment buildings—above all for the Communist Party leadership—its population would be largely unharmed and that no more than 10 per cent. would be killed in an all-out nuclear exchange. I do not accept that view. I believe that hon. Members, even those below the Gangway on the Government side, will concede at least that whatever this vast output of tanks, missiles, submarines and tactical aircraft may be intended for, it is surely not for our benefit.
  More realistically, it is clear that the Soviet Union is seeking in the years ahead to increase the options available to it while decreasing those available to the West. It is doing so with a view ultimately to dictating to Europe and the rest of the world the lines on which it has already dictated to Finland—although in the gentlest possible terms. In 1974, following an indication of Soviet wishes, special legislation had to be introduced and passed in the Finnish Parliament in order to confirm President Kekkonen in office without election.
  Mr. Sydney Bidwell: Will the hon. Gentleman concede that if half of what he has said is true, it would be the best policy for Britain to get on good terms with the Soviet Union? Does he seriously suggest that Britain can play a significant rôle in outmatching what he has described?
  Mr. Churchill: I am all in favour of Britain's being on good terms with the Soviet Union, provided that it is not seeking to remove our liberties and democratic way of life. But the last thing that Britain should do is to encourage by unilateral cuts in defence expenditure the imperialist militarist designs of the present Soviet leadership—not only because it is wrong, not only because it is not in our people's interests, but above all because it undermines the whole basis for any serious international agreement for mutual balanced force reductions or the limitation of strategic weapons.
  The new Administration which is on the point of taking office next week in the United States is committed to concluding a further SALT agreement with the Soviet Government, if that is at all possible. We must wish them well in their efforts to call a halt to this insane nuclear arms race, which not only squanders resources that could be put to better use but threatens the very continuation of life itself on this planet.
  When all the factors are considered, it must be concluded that the strategic nuclear balance between the two super-Powers today is as close as it is ever likely to be. The same is probably true of the nuclear balance in Europe. We are therefore standing at what could be a unique crossroads in history. We should be delinquent if we did not grasp the opportunity that it presents, if there is a real possibility of concluding an agreement which effectively limits or, better still, ends the arms race while safeguarding the freedom which we in the Western democracies and most of us in this House hold so dear by assuring the maintenance of a wholly effective deterrent capability.
  The Secretary of State said that he would like the talks to be successful. How can Britain help in that? The answer is emphatically not in the way in which the Government are going about it. No single action so undermines the whole process of bilateral or multilateral reductions as the introduction of unilateral reductions. It is time that the Government came to their senses and realised the damage they are doing to the interests of Britain and the whole of the free world by undermining these negotiations,

  1553
  on which so many hopes for the future are pinned.
  I shall be glad if the Minister of State will enlighten us on one specific matter. There have been recent reports in the Press of a British manufacturer contracting to assist in fixing fuel flow problems in the engine of the Soviet TU144 Concordski. Will the Minister please give the House an assurance that the engine of the Backfire bomber, which poses a direct threat to Western Europe, our own homeland and all the shipping lanes of the Mediterranean and the North Atlantic and more than 100 of which have already been deployed, is not the same NK144 engine as that in the Concordski? It has been suggested that the Backfire engine is identical with or is an uprated version of that engine. This engine fault is why, nine years after its maiden flight, the Concordski still has not been introduced into passenger service.
  It would be wholly unacceptable to the people of this country if we were to repeat the mistake made by the post-war Labour Government, which sold a few prototypes of the Nene jet engine only to find that 15,000 copies were produced and put into MiG 15s which later shot at our allies in the Korean war.
  The Government are letting down the very men on whom, in the last resort, our freedom and democratic institutions depend. It is a scandal that, at the same time as our Armed Forces are being asked to fight a major anti-terrorist war in Northern Ireland—facing the long hours and constant danger with total dedication and courage—they should be let down at home by the politicians. They can take a lot—they do take a lot—but the endless uncertainty caused by five cuts in defence in the past two years, gnawing away at their ability to fulfil the task assigned to them, is more than should be asked of them.
  My hon. Friend the Member for Petersfield (Mr. Mates) drew attention to the severe lack of training and the reduction of fuel in the Navy, so that we now have a half-speed Royal Navy on the high seas. My hon. Friend the Member for Chertsey and Walton (Mr. Pattie) said that there is a shortage of equipment for the troops when they carry out the tasks assigned to them. The Secretary of State
  1554
  trumpeted about the new equipment that was coming into service but passed very quickly over the fact that he was cutting expenditure on equipment in the coming year by an additional £60 million.
  The forces feel that the Government are not backing them—indeed, that they are leaving them in a critically exposed position in the event of a war in Europe by slowing the procurement of vital equipment, particularly anti-tank and anti-aircraft missiles, and by running down vital war stocks in Germany.
  I remind the Minister of State of the statement issued by his right hon. Friend and his colleagues following the ministerial meeting of NATO on 8th December 1976. The communiqué concluded:
  "Ministers conclude … that there there is for all of the Allies to undertake further measures if the Alliance is to reverse effectively the adverse trends in the NATO/Warsaw Pact conventional military balance. Accordingly Ministers agreed"—
  including our own Secretary of State for Defence—
  "that further strengthening is needed in NATO's conventional defences. Ministers recognise that the achievements of these objectives would call for real annual increases in defence expenditure by allied Governments."
  Is it because the right hon. Gentleman is living in "Alice in Wonderland" that he subscribes his name to such a communiqué saying that he is pledging this country and the Government to increasing defence expenditure in real terms when he knows that he cannot begin to sell that pledge to his hon. Friends below the Gangway and a week later he announces in the House further cuts in defence expenditure? Whom does he think he is fooling?
  The issue before the House is whether the Government should be allowed to get away with running out on their obligations to our allies and going back on their commitments to NATO within one week of their reaffirmation. Above all, does this House have the will—nay, the determination—to ensure that our forces get the support they deserve, the support which our people would wish them to have? Her Majesty's Opposition demand that they should get that support, and I believe that the House tonight will insist that they do.
  9.31 p.m.
  The Minister of State, Ministry of Defence (Dr. John Gilbert): My first task

  1555
  is the pleasant one of congratulating the hon. Member for Stretford (Mr. Churchill) on his first major speech at the Dispatch Box. I enjoyed it enormously. Apart from anything else, it was a clear indication of why the right hon. Member for Chesham and Amersham (Mr. Gilmour) is starting to use the sort of language that we never expected to hear from him. We may well expect him to take further steps in future to prevent himself from being upstaged by his new colleague. [Interruption.] I never expected to draw blood quite so easily or quite so soon. However, it is interesting to see that Opposition Members are sensitive, and we shall note that for future occasions.
  I am obliged to the hon. Member for Stretford for having given me notice of the question about the Lucas contract. There is a difference between both the engines and the performances of the engines in the two types of aircraft. We have been in consultation with the Lucas company about the contract and we will, of course, be referring it to COCOM in due course.
  Mr. Churchill: Is not the hon. Gentleman aware that, although there may be differences, there are grounds for believing that there are very great similarities between the two engines—indeed, that the Backfire is to be an unrated version of the Concordski engine? Would it not be better if the Government were to take this matter in hand rather than leave it to our allies in COCOM?
  Dr. Gilbert: I was aware of this matter before the hon. Gentleman raised it. I assure him that it has been looked at and the strategic considerations perfectly taken into account. There is nothing for him to be concerned about.
  Until a few minutes ago this had been a quite thoughtful debate—[Interruption]—distinguished by the absence of some of the hon. Members who are now making noise. However, it is good to know that those hon. Members have an interest, if only in coming in for the winding-up speeches.
  Mr. Jasper More: On a point of order, Mr. Deputy Speaker. With regard to those hon. Members coming in for the winding-up speeches, may I draw your attention to the fact that there are only seven hon. Members sitting behind the Minister?
  Mr. Deputy Speaker (Mr. Oscar Murton): That is not a point of order.
  Dr. Gilbert: If that is the Opposition's sense of arithmetic, I leave it to them. [Interruption.] I must say that hon. Members opposite must be hard up.
  There has been little of the impugning of the motives of those with whom one disagrees that has so often been a melancholy feature on occasions such as this in the past. Two basic questions must be considered in a defence debate. The first is whether our defences, when considered in company with those of our allies and in the light of any perceived threat, are adequate and balanced. The second is whether we can get our present level of defences more economically and can sustain that level without doing ourselves irreparable economic damage of a sort that, in the long run, will impair our ability to meet even our present level of defence commitments.
  Most Opposition speakers, as well as my hon. Friends the Members for Liverpool, Toxtoth (Mr. Crawshaw) and for Loughborough (Mr. Cronin), have addressed themselves primarily to the first of those questions. My hon. Friend the Member for Salford, East (Mr. Allaun) and his fellow signatories of the amendment standing in his name have addressed themselves largely to the second question, while the hon. Member for Petersfield (Mr. Mates), in a most thoughtful speech to which I shall return, held that the answers to those questions were necessarily incompatible.
  Dealing with the amendment first, I start with the general proposition that no one wishes to spend one penny more on defence than is absolutely necessary. I thought that that would be a generally agreed proportion. However, the right hon. Member for Chesham and Amersham said in a most disparaging tone that many Labour Members below the Gangway did not like any defence spending at all. What on earth is wrong with that?
  Mr. Hector Monro: A hell of a lot.
  Dr. Gilbert: Does the right hon. Gentleman actually like defence spending? Does he actually like spending money on weapons of mass destruction

  1557
  when we would much prefer not to spend it on such things?
  Mr. Ian Gilmour: Since the only way of protecting the West and our freedom is to have weapons, of course I like spending money.
  Dr. Gilbert: Of course we recognise the necessity to spend money, but I did not think we actually liked doing it. We are learning something about the right hon. Gentleman. Maybe he was not parading under false colours. He actually likes spending.
  Mr. Hastings: Does the Minister think that what he has just said is likely to improve the morale of the Armed Services at the moment?
  Dr. Gilbert: I am glad to have that intervention from the hon. Gentleman, who has not been here throughout the debate.
  Mr. Hastings: Cheap.
  Dr. Gilbert: Cheap it may be, but it is a fact. I would have thought that everyone in the House could think of things on which he would rather spend money than on defence expenditure if it were possible to do so in terms of our national security. I must say that the Conservative Party is showing a very different face in public from that which I had expected.
  Of course, defence spending is a penalty which we impose upon ourselves to protect our society. That is understood perfectly. But I am amazed by the reception given to the proposition that this is not a form of self-indulgence which we actually enjoy. I had not realised that there were so many masochists among Opposition Members.
  It is no reflection on the hon. Member for Mid-Bedfordshire (Mr. Hastings) or on those who devote their lives to our defence, whether it be in the Services or in our defence industries, to say that all of us would far prefer, if it were possible in terms of our foreign policy constraints and in terms of perceived threats, not to have to spend that money. That is a proposition which I expected would meet with universal acceptance. However, we learn that that is not the case.
  I turn to the speech of my hon. Friend the Member for Salford, East, who claims
  1558
  that the last set of cuts were actually fictitious. I have debated this claim with him both here and in another place. I agree with him that most of the figures bandied about in this and other debates have represented cuts in planned programmes. But it is also the case that defence expenditure in 1975–76 was some 3 per cent. below expenditure in 1971–72 in real terms. There has been a real cut in defence expenditure, and this has involved a reduction in manpower strengths, both Service and civilian. It has involved the paying off of some ships. It has involved the disbandment of some RAF transport squadrons and the closing of some bases overseas. I do not think that it can be reasonably argued that these were not real cuts.
  I turn now to some of the other matters raised in the debate. There is a lot of truth in what my hon. Friend the Member for Hornchurch (Mr. Williams) said, although I did not agree with all his terminology. There was an element of disarmament by virtue of the increasing cost of advanced technology. My hon. Friend also questioned the big ship concept. As I understood it, he wanted smaller and cheaper ships. But, as I am sure he will appreciate, only a relatively modest proportion of the cost of a new fighting ship these days reposes in its hull. The overwhelming proportion of its costs is in the equipment with which, necessarily, it has to be armed.
  Although certain types of equipment such as electronic counter-measures are relatively cheap to provide, missiles to deal with attacking aircraft or attacking missiles are diabolically expensive, and there is little point in putting ships on the high seas if they are to be sitting ducks and unable to defend themselves without highly expensive weapons systems. This is always a question of balance. I have to say to my hon. Friend, however, that there is no escaping the fact that the costs of individual units in the Fleet will go inexorably upwards.
  My hon. Friend the Member for Hornchurch also referred to the reorganisation of the Royal Air Force as a means of making substantial savings. I have no reason to believe that there could be any large-scale economies from a merger of the sort that he suggests. I do not know of any country at the

  1559
  moment which has reorganised its air power in that way. However, I should point out to my hon. Friend that our forces on the Continent are completely integrated in the NATO command structure. As my right hon. Friend the Secretary of State has pointed out, BAOR is under the command of NATO's Northern Army Group, whereas RAF Germany is part of NATO's Second Allied Tactical Air Force. What my hon. Friend suggests would involve a complete restructuring not only of our own arrangements but of the NATO military organisation, with considerable political and diplomatic implications.
  The last point he made was whether the Ministry of Defence should resurrect the independent review body. I listened carefully to what he said but I was not sure if he was referring to the Programme Evaluation Group, which was started by the present Chancellor of the Exchequer—my right hon. Friend the Member for Leeds, East (Mr. Healey)—and wound up by the Conservatives, or whether he was referring to some other outside group of observers. I endorse the judgment of the Conservatives in government that the role of the Programme Evaluation Group has been rather subsumed in a strengthened defence policy staff. However, I shall be happy to look in detail at any suggestion that my hon. Friend wishes to make.
  My hon. Friend the Member for Barking (Miss Richardson) raised the question of offset purchases from the United States. I suspect that there is a certain amount of misinformation in circulation on this subject. Since the signing of the memorandum of understanding on reciprocal purchases in September 1975, a number of British firms have competed successfully for United States Government contracts—ejector seats, head-up displays, battery computers, and so on. Since 1970—the past seven years—military purchases between this country and the United States are just about in balance. Our own success owes a great deal to the Harrier aircraft, but since 1970 there has been a genuine two-way street in defence procurement between this country and the Americans.
  Mr. Churchill: Perhaps the Minister will tell us what is the Government's reaction to reports from Capitol Hill that
  1560
  the Harrier had been grounded for a high proportion of time in its service with the United States Marine Corps, as a result of the unavailability of spare parts. This has been attributed to the defence cuts by Britain and the fact that there is not adequate provision of British spares.
  Dr. Gilbert: As I understand it, the reason the Harrier has been grounded—the data to which the hon. Member refers are a little out of date, but that is not his fault—is that it has been such a successful aeroplane that it has been used far more intensively than anyone could have foreseen. I am surprised that hon. Gentlemen laugh at that. They should boast about the Harrier, which is one of our successes. Good heavens above, what a party of patriots they are! The aeroplane was so successful that it was more intensively used than anticipated, and the need for spares therefore was higher than anticipated, and the Americans just had not ordered them.
  My hon. Friend the Member for Bishop Auckland (Mr. Boyden), who is Chairman of the Expenditure Committee, asked questions about the Lewis report on training. I am hoping to publish that report soon. Mr. Lewis was appointed by my predecessor as an independent expert to undertake an examination of training. His recommendations were submitted to the Defence Sub-Committee in September last year, and up to now we have not had any reply at the Ministry from that Committee. The main thrust of this substantial and wide-ranging report was that the scope for economies through joint training—the potential scope—is relatively small compared with the total cost of the overall Service training, but the main criterion for undertaking joint training is whether it can provide savings which would not come from single Service measures.
  My hon. Friend also suggested that we should pursue some of the ideas of the Dutch Government in this respect. I have had brief informal discussions with the new Dutch Defence Minister and I certainly propose to carry them forward in line with my hon. Friend's suggestion.
  My hon. Friend the Member for Liverpool, Toxteth, like the hon. Member for Petersfield, raised questions about the availability of transport resources for moving our troops to areas where they

  1561
  might be needed. The hon. Member asked about air transport and my hon. Friend about sea and rail transport. On the former, the combination of both the Hercules and the VC10 fleets can meet all our priority one commitments to NATO for reinforcements, and that continues to be the situation.
  As for transport by sea and rail, I can assure my hon. Friend that the capacity of the Channel and East Coast ports, through which the men, munitions and vehicles would have to go, is considerably in excess of what would be needed in a time of tension preparatory to war. The capacity of these ports for carrying a single day's holidaymakers in the summer season is far in excess of what would be needed in terms of a planned programme of build-up in a time of tension, should one occur.
  The right hon. Member for Down, South (Mr. Powell) asked about the impact of the economy measures on Northern Ireland. Of course, one recognises how serious they have been, and they are much regretted. However, as far as I know, there will be no further measures with an impact on the economy of that part of the United Kingdom. I realise that the right hon. Gentleman is disappointed at the rate of implementation of the conversion of more of the Ulster Defence Regiment to a full-time basis. There are many applications in the pipeline and it takes time to process them. If the right hon. Gentleman is aware of difficulties in that processing, I should be obliged if he would let me know.
  My hon. Friend the Member for Loughborough said that it would be ingenuous to quote general officers on the subject of defence cuts. I do not go entirely all the way with my hon. Friend, but it is perfectly true that any adviser worth his salt will recommend further expenditure on the subject for which he is responsible. I should be very surprised if the right hon. Member for Chesham and Amersham, or any of his colleagues who held ministerial responsibility for major spending Departments when they were in office, could not endorse that view from their experience.
  Mr. Patrick Mayhew: Is it not the case that after
  1562
  the 1974 review the hon. Gentleman's colleague, then the Minister of State, said that the review represented the judgment, cool and considered, of what we needed to spend to secure our safety in this country? Is it not that which is worrying our Chiefs of Staff?
  Dr. Gilbert: The hon. and learned Gentleman will be aware that over the last several years there has been a systematic rundown of our defence commitments, and quite rightly so. I am glad to say that that was largely endorsed by the Conservative Party. As a result of that rundown we now concentrate on our NATO commitments. As a result, it has proved possible to accommodate these cuts without any serious impact on our operational capability.
  I turn again to the remarks of the hon. Member for Petersfield. We can all make a slip of the tongue in the course of a debate. Referring to BAOR, the hon. Gentleman said that the Army was not there. A moment later he quite properly corrected himself, saying that the bulk of the Army was not there. That assertion was only a little less preposterous than the first, Of course the Army is there. We have 55,000 men there. The hon. Gentleman will be aware that for many years under the previous Government there were a few thousand men from BAOR in Northern Ireland on 48 hours' notice. Nothing has changed in that respect since this Government took office.
  Mr. Mates: The point I was making was that two years later so much more of the time of BAOR was taken up in Northern Ireland that operational efficiency continued to decline.
  Dr. Gilbert: I am not seeking to put words into the hon. Gentleman's mouth. All of us would far prefer it if there were no British Army operating in Northern Ireland, but I am sure that the hon. Gentleman will agree that, while the training and experience in Northern Ireland are not wholly applicable to what troops might find on the central front, they have given soldiers experience under fire which has proved extremely valuable to them.
  The one point on which I take issue with the hon. Gentleman is his statement that we used to be one of the most

  1563
  reliable Allies in NATO, and that, sadly, that was not so today. [HON. MEMBERS: "Hear, hear."] I note that that proposition, which was largely echoed by the hon. Gentleman's right hon. Friend, finds some support among Opposition Members. The right hon. Gentleman said that our present defence forces bore very little relation to our defence needs.
  Mr. Ian Gilmour: I said that the Government's current defence policy bore little relation to our needs.
  Dr. Gilbert: I remind the right hon. Gentleman that we have 55,000 men in BAOR and that the Royal Air Force deploys a balanced force of strike, air defence and reconnaissance aircraft in Germany. These forces are integrated with NATO commands. In addition, NATO relies on the Royal Navy and the RAF to provide the main weight of our ready maritime forces in the Eastern Atlantic and the Channel area. Our contribution here numbers about 130 ships and 13 RN and RAF squadrons of fixed-wing aircraft, and helicopters. Alone among our European Allies we operate a nuclear-powered fleet of submarines, of
  which there are now nine in service. We are the only European Power to contribute strategic and theatre nuclear forces to the Alliance's general deterrent.
  I now turn to the future, beginning with the Navy. There are five new classes of warship under construction. The re-equipment programme includes the Lynx helicopter and Sea Harrier. Reprovision of the Army includes the Milan anti-tank guided weapon and planned improvements in the Chieftain tank, such as the new laser sight. In the RAF, further squadrons of Jaguars are being formed, and that is not all.
  In percentage terms, our contribution is higher than that of any other European country in the Alliance. My right hon. Friend can hold his head high when he speaks in the councils of our Allies in Europe. It is disgraceful of the right hon. Gentleman to suggest that our forces will have only a very small relation to our defence needs.
  Question put, That the amendment be made:—
  The House divided: Ayes 77, Noes 214.

  Division No. 29.]

  AYES

  [10.0p.m.

  Allaun, Frank

  Hatton, Frank

  Newens, Stanley

  Atkins, Ronald(Preston N)

  Hayman, Mrs Helena

  Ovenden, John

  Atkinson, Norman

  Heffer, Eric S.

  Parry, Robert

  Bennett, Andrew(Stockport N)

  Hooley, Frank

  Pavitt, Laurie

  Bidwell, Sydney

  Hoyle, Doug (Nelson)

  Price, C. (Lewisham W)

  Buchan, Norman

  Hughes, Robert (Aberdeen N)

  Roberts, Gwilym (Cannock)

  Butler, Mrs Joyce (Wood Green)

  Hughes, Roy (Newport)

  Rodgers, George (Chorley)

  Callaghan, Jim (Middleton & P)

  Jeger, Mrs Lena

  Rooker, J. W.

  Canavan, Dennis

  Jenkins, Hugh (Putney)

  Ryman, John

  Carmichael, Neil

  Kelley, Richard

  Sedgemore, Brian

  Carter-Jones, Lewis

  Kerr, Russell

  Selby, Harry

  Clemitson, lvor

  Kilroy-Silk, Robert

  Sillars, James

  Colquhoun, Ms Maureen

  Kinnock, Neil

  Silverman, Julius

  Cook, Robin F. (Edin C)

  Lambie, David

  Skinner, Dennis

  Corbett, Robin

  Lamond, James

  Small, William

  Crowther, Stan (Rotherham)

  Latham, Arthur (Paddington)

  Swain, Thomas

  Edge, Geoff

  Lee, John

  Thomas, Ron (Bristol NW)

  Edwards, Robert (Wolv SE)

  Lestor, Miss Joan (Eton & Slough)

  Thorne, Stan (Preston South)

  Ellis, John (Brigg & Scun)

  Litterick, Tom

  Tierney, Sydney

  Evans, Gwynfor (Carmarthen)

  Loyden, Eddie

  Torney, Tom

  Evans, loan (Aberdare)

  Lyon, Alexander (York)

  Wigley, Dafydd

  Fernyhough, Rt Hon E.

  McMillan, Tom (Glasgow C)

  Wilson, William (Coventry SE)

  Flannery, Martin

  Madden, Max

  Wise, Mrs Audrey

  Fletcher, Ted (Darlington)

  Marshall, Jim (Leicester S)

  Garrett, John (Norwich S)

  Maynard, Miss Joan

  TELLERS FOR THE AYES:

  Grocott, Bruce

  Mikardo, lan

  Dr. Oonagh McDonald and

  Hart, Rt Hon Judith

  Miller, Mrs Millie (llford N)

  Miss Jo Richardson.

  NOES

  Abse, Leo

  Blenkinsop, Arthur

  Buchanan, Richard

  Anderson, Donald

  Boardman, H.

  Callaghan, Rt Hon J. (Cardiff SE)

  Archer, Peter

  Booth, Rt Hon Albert

  Campbell, Ian

  Armstrong, Ernest

  Bottomley, Rt Hon Arthur

  Cant, R. B.

  Ashton, Joe

  Bowden, A.(Brighton, Kemptown)

  Carter, Ray

  Bagier, Gordon A.T.

  Boyden, James(Bish Auck)

  Cartwright, John

  Barnett, Guy(Greenwich)

  Bradley, Tom

  Cocks, Rt Hon Michael

  Barnett, Rt Hon Joel(Heywood)

  Bray, Dr Jeremy

  Cohen, Stanley

  Bates, Alf

  Brown, Hugh D.(Provan)

  Concannon, J. D.

  Beith, A. J.

  Brown, Robert C. (Newcastle W)

  Conlan, Bernard

  Bishop, E. S.

  Brown, Ronald (Hackney S)

  Cowans, Harry

  Cox, Thomas(Tooting)

  Jay, Rt Hon Douglas

  Roberts, Albert (Normanton)

  Crawshaw, Richard

  John, Brynmor

  Roderick, Caerwyn

  Cronin, John

  Johnson, James (Hull West)

  Rodgers, Rt Hon William (Stockton)

  Crosland, Rt Hon Anthony

  Johnson, Walter(Derby S)

  Rose, Paul B.

  Cryer, Bob

  Jones, Alec (Rhondda)

  Ross, Stephen (Isle of Wight)

  Cunningham, G. (Islington S)

  Jones, Barry(East Flint)

  Ross, Rt Hon W. (Kilmarnock)

  Cunningham, Dr J.(Whiteh)

  Jones, Dan (Burnley)

  Rowlands, Ted

  Davidson, Arthur

  Judd, Frank

  Sandelson, Neville

  Davies, Bryan(Enfield N)

  Kaufman, Gerald

  Shaw, Arnold (llford South)

  Davies, Denzil (Llanelli)

  Lamborn, Harry

  Sheldon, Rt Hon Robert

  Davies, Ifor (Gower)

  Leadbitter, Ted

  Shore, Rt Hon Peter

  Davis, Clinton (Hackney C)

  Lever, Rt Hon Harold

  Silkin, Rt Hon John (Deptford)

  Deakins, Eric

  Lewis, Arthur (Newham N)

  Silkin, Rt Hon S. C. (Dulwich)

  Dean, Joseph (Leeds West)

  Lewis, Ron (Carlisle)

  Sillars, James

  Dempsey, James

  Lipton, Marcus

  Smith, John (N Lanarkshire)

  Doig, Peter

  Lomas, Kenneth

  Snape, Peter

  Dormand, J. D.

  Luard, Evan

  Spriggs, Leslie

  Douglas-Mann, Bruce

  Lyons, Edward(Bradford W)

  Stallard, A. W.

  Duffy, A. E. P.

  Mabon, Rt Hon Dr J. Dickson

  Steel, Rt Hon David

  Dunn, James A.

  McCartney, Hugh

  Stewart, Rt Hon M. (Fulham)

  Dunnett, Jack

  McElhone, Frank

  Stoddart, David

  Eadie, Alex

  McGuire, Michael(Ince)

  Stott, Roger

  English, Michael

  MacKenzie, Gregor

  Strang, Gavin

  Ennals, David

  Mackintosh, John P.

  Strauss, Rt Hon G. R.

  Evans, Fred (Caerphilly)

  Maclennan, Robert

  Taylor, Mrs Ann (Bolton W)

  Ewing, Harry (Stirling)

  McNamara, Kevin

  Thomas, Jeffrey (Abertillery)

  Faulds, Andrew

  Magee, Bryan

  Thomas, Mike (Newcastle E)

  Fitch, Alan (Wigan)

  Mahon, Simon

  Thorpe, Rt Hon Jeremy (N Devon)

  Foot, Rt Hon Michael

  Mallalieu, J. P. W.

  Tomlinson, John

  Forrester, John

  Marks, Kenneth

  Urwin, T. W.

  Fowler, Gerald(The Wrekin)

  Marshall, Dr Edmund (Goole)

  Varley, Rt Hon Eric G.

  Fraser, John (Lambeth, N'w'd)

  Mason, Rt Hon Roy

  Wainwright, Edwin (Dearne V)

  Freeson, Reginald

  Meacher, Michael

  Wainwright, Richard (Colne V)

  Freud, Clement

  Mellish, Rt Hon Robert

  Walden, Brian (B'ham L'dyw'd)

  Garrett, W. E. (Wallsend)

  Millan, Rt Hon Bruce

  Walker, Harold (Doncaster)

  George, Bruce

  Miller, Dr M. S. (E Kilbride)

  Walker, Terry (Kingswood)

  Gilbert, Dr John

  Moonman, Eric

  Ward, Michael

  Ginsburg, David

  Morris, Charles R. (Openshaw)

  Watkins, David

  Golding, John

  Morris, Rt Hon J. (Aberavon)

  Watkinson, John

  Gourlay, Harry

  Moyle, Roland

  Weetch, Ken

  Graham, Ted

  Mulley, Rt Hon Frederick

  Weitzman, David

  Grant, George (Morpeth)

  Murray, Rt Hon Ronald King

  Wellbeloved, James

  Grant, John (Islington C)

  Noble, Mike

  White, Frank R. (Bury)

  Grimond, Rt Hon J.

  Oakes, Gordon

  White, James (Pollok)

  Hamilton, James (Bothwell)

  Ogden, Eric

  Whitehead, Phillip

  Hardy, Peter

  O'Halloran, Michael

  Whitlock, William

  Harper, Joseph

  Orbach, Maurice

  Willey, Rt Hon Frederick

  Harrison, Walter (Wakefield)

  Orme, Rt Hon Stanley

  Williams, Rt Hon Alan (Swansea W)

  Hattersley, Rt Hon Roy

  Owen, Rt Hon Dr David

  Williams, Alan Lee (Hornch'ch)

  Healey, Rt Hon Denis

  Padley, Walter

  Williams, Rt Hon Shirley (Hertford)

  Hooson, Emlyn

  Palmer, Arthur

  Williams, Sir Thomas (Warrington)

  Horam, John

  Pardoe, John

  Wilson, Alexander (Hamilton)

  Howell, Rt Hon Denis (B'ham, Sm H)

  Park, George

  Wilson, Rt Hon Sir Harold (Huyton)

  Howells, Geraint (Cardigan)

  Parker, John

  Woodall, Alec

  Huckfield, Les

  Pendry, Tom

  Woof, Robert

  Hughes, Rt Hon C. (Anglesey)

  Penhaligon, David

  Wrigglesworth, Ian

  Hunter, Adam

  Perry, Ernest

  Young, David (Bolton E)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Phipps, Dr Colin

  Irving, Rt Hon S. (Dartford)

  Prentice, Rt Hon Reg

  TELLERS FOR THE NOES:

  Jackson, Colin (Brighouse)

  Price, William (Rugby)

  Mr. James Tinn and

  Jackson, Miss Margaret (Lincoln)

  Radice, Giles

  Mr. Donald Coleman.

  Janner, Greville

  Rees, Rt Hon Merlyn (Leeds S)

  Question accordingly negatived.

  Main Question put:—

  The House divided: Ayes 265, Noes 288.

  DivisionNo.30.]

  AYES

  [10.14p.m.

  Adley, Robert

  Bennett, Dr Reginald (Fareham)

  Braine, Sir Bernard

  Aitken, Jonathan

  Benyon, W.

  Brittan, Leon

  Alison, Michael

  Berry, Hon Anthony

  Brocklebank-Fowler, C.

  Arnold, Tom

  Biffen, John

  Brotherton, Michael

  Atkins, Rt Hon H. (Spelthorne)

  Biggs-Davison, John

  Brown, Sir Edward (Bath)

  Awdry, Daniel

  Blaker, Peter

  Bryan, Sir Paul

  Baker, Kenneth

  Body, Richard

  Buchanan-Smith, Alick

  Banks, Robert

  Boscawen, Hon Robert

  Buck, Antony

  Beith, A. J.

  Bottomley, Peter

  Budgen, Nick

  Bell, Ronald

  Bowden, A. (Brighton, Kemptown)

  Bulmer, Esmond

  Bennett, Sir Frederic (Torbay)

  Boyson, Dr Rhodes (Brent)

  Burden, F.A.

  1566

  1567

  Butler, Adam (Bosworth)

  Holland, Philip

  Parkinson, Cecil

  Carlisle Mark

  Hooson, Emlyn

  Pattle, Geoffrey

  Chalker, Mrs Lynda

  Hordern, Peter

  Penhaligon, David

  Channon, Paul

  Howe, Rt Hon Sir Geoffrey

  Percival, Ian

  Churchill, W. S.

  Howell, David (Guildford)

  Pink, R. Bonner

  Clark Alan (Plymouth, Sutton)

  Howells, Geraint (Cardigan)

  Price, David (Eastleigh)

  Clark, William (Croydon S)

  Hunt, David (Wirral)

  Prior, Rt Hon James

  Clarke Kenneth (Rushcliffe)

  Hunt, John (Bromley)

  Pym, Rt hon Francis

  Clegg, Walter

  Hurd, Douglas

  Raison, Timothy

  Cockcroft, John

  Hutchison, Michael Clark

  Rathbone, Tim

  Cooke Robert (Bristol W)

  Irving, Charles (Cheltenham)

  Rawlinson, Rt Hon Sir Peter

  Cope, John

  James, David

  Rees, Peter (Dover & Deal)

  Cordle, John H.

  Jenkin, Rt Hon P. (Wanst'd & W'df'd)

  Renton, Rt Hon Sir D. (Hunts)

  Cormack, Patrick

  Jessel, Toby

  Renton, Tim (Mid-Sussex)

  Corrie, John

  Johnson Smith, G. (E Grinstead)

  Rhodes James, R.

  Costain, A. P.

  Jones, Arthur (Daventry)

  Ridley, Hon Nicholas

  Craig Rt Hon W. (Belfast E)

  Jopling, Michael

  Ridsdale, Julian

  Critchley, Julian

  Joseph, Rt Hon Sir Keith

  Rifkind, Malcolm

  Crouch, David

  Kaberry, Sir Donald

  Rippon, Rt Hon Geoffrey

  Crowder F. P.

  Kershaw, Anthony

  Roberts, Wyn (Conway)

  Davies Rt Hon J. (Knutsford)

  Kimball, Marcus

  Rodgers, Sir John (Sevenoaks)

  Dean, Paul (N Somerset)

  King, Evelyn (South Dorset)

  Ross, Stephen (Isle of Wight)

  Dodsworth, Geoffrey

  King, Tom (Bridgwater)

  Rossi, Hugh (Hornsey)

  Douglas-Hamilton, lord James

  Kitson, Sir Timothy

  Rost, Peter (SE Derbyshire)

  Drayson, Burnaby

  Knight, Mrs Jill

  Royle, Sir Anthony

  du Cann, Rt Hon Edward

  Knox, David

  Sainsbury, Tim

  Durant, Tony

  Lamont, Norman

  St. John Stevas, Norman

  Edwards, Nicholas (Pembroke)

  Langford-Holt, Sir John

  Scott, Nicholas

  Elliott, Sir William

  Latham, Michael (Melton)

  Shaw, Giles(Pudsey)

  Eyre, Reginald

  Lawrence, Ivan

  Shelton, William (Streatham)

  Fairbairn, Nicholas

  Lawson, Nigel

  Shepherd, Colin

  Fairgrieve, Russell

  Lester, Jim (Beeston)

  Shersby, Michael

  Farr, John

  Lewis, Kenneth (Rutland)

  Silvester, Fred

  Fell, Anthony

  Lloyd, Ian

  Sims, Roger

  Finsberg, Geoffrey

  Loveridge, John

  Sinclair, Sir George

  Fisher, Sir Nigel

  Luce, Richard

  Skeet, T. H. H.

  Fletcher-Cooke, Charles

  McAdden, Sir Stephen

  Smith, Dudley (Warwick)

  Fookes, Miss Janet

  McCrindle, Robert

  Speed, Keith

  Forman, Nigel

  Macfarlane, Nell

  Spence, John

  Fowler, Norman (Sulton C'f'd)

  MacGregor, John

  Spicer, Michael (S Worcester)

  Fox, Marcus

  Macmillan, Rt Hon M. (Farnham)

  Sproat, Iain

  Fraser, Rt Hon H. (Stafford & St)

  McNair-Wilson, M. (Newbury)

  Stainton, Keith

  Freud, Clement

  McNair-Wilson, P. (New Forest)

  Stanbrook, Ivor

  Fry, Peter

  Madel, David

  Stanley, John

  Galbraith, Hon T. G. D.

  Marshall, Michael (Arundel)

  Steel, Rt Hon David

  Gardiner, George (Reigate)

  Marten, Neil

  Steen, Anthony (Wavertree)

  Gardner, Edward (S. Fylde)

  Mates, Michael

  Stewart, Ian (Hitchin)

  Gilmour, Rt Hon Ian (Chesham)

  Mather, Carol

  Stokes, John

  Gilmour, Sir John (East Fife)

  Maude, Angus

  Stradling Thomas, J.

  Glyn, Dr Alan

  Mawby, Ray

  Tapsell, Peter

  Godber, Rt Hon Joseph

  Maxwell-Hyslop, Robin

  Taylor, Teddy (Cathcart)

  Goodhart, Philip

  Mayhew, Patrick

  Tebbit, Norman

  Goodhew, Victor

  Meyer, Sir Anthony

  Thatcher, Rt Hon Margaret

  Goodlad, Alastair

  Miller, Hal (Bromsgrove)

  Thomas, Rt Hon P. (Hendon S)

  Gorst, John

  Mills, Pater

  Thorpe, Rt Hon Jeremy (N Devon)

  Gow, Ian (Eastbourne)

  Miscampbell, Norman

  Townsend, Cyril D.

  Gower, Sir Raymond (Barry)

  Mitchell, David (Basingstoke)

  Trotter, Neville

  Grant, Anthony (Harrow C)

  Moate, Roger

  van Straubenzee, W. R.

  Gray, Hamish

  Monro, Hector

  Vaughan, Dr Gerard

  Grieve, Percy

  Montgomery, Fergus

  Viggers, Peter

  Griffiths, Eldon

  Moore, John (Croydon C)

  Wainwright, Richard (Colne V)

  Grimond, Rt Hon J.

  More, Jasper (Ludlow)

  Wakeham, John

  Grist, Ian

  Morgan, Geraint

  Walder, David (Clitheroe)

  Grylls, Michael

  Morgan-Giles, Rear-Admiral

  Walker, Rt Hon P. (Worcester)

  Hall, Sir John

  Morris, Michael (Northampton S)

  Walters, Dennis

  Hall-Davis, A. G. F.

  Morrison, Charles (Davizes)

  Warren, Kenneth

  Hamilton, Michael (Salisbury)

  Morrison, Hon Peter (Chester)

  Weatherill, Bernard

  Hampson, Dr Keith

  Mudd, David

  Wells, John

  Hannam, John

  Neave, Airey

  Whitelaw, Rt Hon William

  Harvie Anderson, Rt Hon Miss

  Nelson, Anthony

  Wiggin, Jerry

  Hastings, Stephen

  Neubert, Michael

  Winterton, Nicholas

  Havers, Sir Michael

  Newton, Tony

  Wood, Rt Hon Richard

  Hawkins, Paul

  Nott, John

  Young, Sir G. (Ealing, Acton)

  Hayhoe, Barney

  Onslow, Cranley

  Younger, Hon George

  Heath, Rt Hon Edward

  Oppenheim, Mrs Sally

  Heseltine, Michael

  Page, John (Harrow West)

  TELLERS FOR THE AYES:

  Hicks, Robert

  Page, Rt Hon R. Graham (Crosby)

  Mr. Spencer Le Marchant and

  Higgins, Terence L.

  Page, Richard (Workington)

  Mr. Michael Roberts.

  Hodgson, Robin

  Pardoe, John

  NOES

  Abse, Leo

  Archer, Peter

  Atkins, Ronald (Preston N)

  Allaun, Frank

  Armstrong, Ernest

  Atkinson, Norman

  Anderson, Donald

  Ashton, Joe

  Bagier, Gordon A. T.

  1568

  1569

  Barnett, Guy (Greenwich)

  Ginsburg, David

  Mikardo, Ian

  Barnett, Rt Hon Joel (Heywood)

  Golding, John

  Millan, Rt Hon Bruce

  Bates, Alf

  Gould, Bryan

  Miller, Dr M. S. (E Kilbride)

  Bennett, Andrew (Stockport N)

  Gourlay, Harry

  Miller, Mrs Millie (llford N)

  Bidwell, Sydney

  Graham, Ted

  Moonman, Eric

  Bishop, E. S.

  Grant, George (Morpeth)

  Morris, Charles R. (Openshaw)

  Blenkinsop, Arthur

  Grant, John (Islington C)

  Morris, Rt Hon J. (Aberavon)

  Boardman, H.

  Grocott, Bruce

  Moyle, Roland

  Booth, Rt Hon Albert

  Hamilton, James (Bothwell)

  Mulley, Rt Hon Frederick

  Bottomley, Rt Hon Arthur

  Hardy, Peter

  Murray, Rt Hon Ronald King

  Boyden, James (Bish Auck)

  Harper, Joseph

  Newens, Stanley

  Bradley, Tom

  Harrison, Walter (Wakefield)

  Noble, Mike

  Bray, Dr Jeremy

  Hart, Rt Hon Judith

  Oakes, Gordon

  Brown, Hugh D. (Provan)

  Hattersley, Rt Hon Roy

  Ogden, Eric

  Brown, Robert C. (Newcastle W)

  Hatton, Frank

  O'Halloran, Michael

  Brown, Ronald (Hackney S)

  Hayman, Mrs Helene

  Orbach, Maurice

  Buchan, Norman

  Healey, Rt Hon Denis

  Orme, Rt Hon Stanley

  Buchanan, Richard

  Heffer, Eric S.

  Ovenden, John

  Butler, Mrs Joyce (Wood Green)

  Henderson, Douglas

  Owen, Rt Hon Dr David

  Callaghan, Rt Hon J. (Cardiff SE)

  Hooley, Frank

  Padley, Walter

  Callaghan, Jim (Middleton & P)

  Horam, John

  Palmer, Arthur

  Campbell, Ian

  Howell, Rt Hon Denis (B'ham, Sm H)

  Park, George

  Caravan, Dennis

  Hoyle, Doug (Nelson)

  Parker, John

  Cant, R. B.

  Huckfield, Les

  parry, Robert

  Carmichael, Neil

  Hughes, Rt Hon C. (Anglesey)

  Pavitt, Laurie

  Carter, Ray

  Hughes, Robert (Aberdeen N)

  Pendry, Tom

  Carter-Jones, Lewis

  Hughes, Roy (Newport)

  Perry, Ernest

  Cartwright, John

  Hunter, Adam

  Phipps, Dr Colin

  Castle, Rt Hon Barbara

  Irvine, Rt Hon Sir A. (Edge Hill)

  Price, C. (Lewisham W)

  Clemitson, Ivor

  Irving, Rt Hon S. (Dartford)

  Price, William (Rugby)

  Cocks, Rt Hon Michael (Bristol)

  Jackson, Colin (Brighouse)

  Radice, Giles

  Cohen, Stanley

  Jackson, Miss Margaret (Lincoln)

  Rees, Rt Hon Merlyn (Leeds S)

  Coleman, Donald

  Janner, Greville

  Reid, George

  Colquhoun, Ms Maureen

  Jay, Rt Hon Douglas

  Richardson, Miss Jo

  Concannon, J. D.

  Jeger, Mrs Lena

  Roberts, Albert (Normanton)

  Conlan, Bernard

  Jenkins, Hugh (Putney)

  Roberts, Gwilym (Cannock)

  Cook, Robin F. (Edin C)

  John, Brynmor

  Robinson, Geoffrey

  Corbett, Robin

  Johnson, James (Hull West)

  Roderick, Caerwyn

  Cowans, Harry

  Johnson, Walter (Derby S)

  Rodgers, George (Chorley)

  Cox, Thomas (Tooting)

  Jones, Alec (Rhondda)

  Rodgers, Rt Hon William (Stockton)

  Craigen, Jim (Maryhill)

  Jones, Barry (East Flint)

  Rooker, J. W.

  Cronin, John

  Jones, Dan (Burnley)

  Rose, Paul B.

  Crosland, Rt Hon Anthony

  Judd, Frank

  Ross, Rt Hon W. (Kilmarnock)

  Crowther, Stan (Rotherham)

  Kaufman, Gerald

  Rowlands, Ted

  Cryer, Bob

  Kelley, Richard

  Ryman, John

  Cunningham, G. (Islington S)

  Kerr, Russell

  Sandelson, Neville

  Cunningham, Dr J. (Whiteh)

  Kilroy-Silk, Robert

  Sedgemore, Brian

  Davidson, Arthur

  Kinnock, Nell

  Selby, Harry

  Davies, Bryan(Enfield N)

  Lambie, David

  Shaw, Arnold (llford South)

  Davies, Denzil (Llanelli)

  Lamborn, Harry

  Sheldon, Rt Hon Robert

  Davies, Ifor (Gower)

  Lamond, James

  Shore, Rt Hon Peter

  Davis, Clinton (Hackney C)

  Latham, Arthur (Paddington)

  Silkin, Rt Hon John (Deptford)

  Deakins, Eric

  Leadbitter, Ted

  Silkin, Rt Hon S. C. (Dulwich)

  Dean, Joseph (Leeds West)

  Lee, John

  Sillars, James

  Dempsey, James

  Lestor, Miss Joan (Eton & Slough)

  Silverman, Julius

  Doig, Peter

  Lever, Rt Hon Harold

  Skinner, Dennis

  Dormand, J. D.

  Lewis, Arthur (Newham N)

  Small, William

  Douglas-Mann, Bruce

  Lewis, Ron (Carlisle)

  Smith, John (N Lanarkshire)

  Duffy, A. E. P.

  Lipton, Marcus

  Spearing, Nigel

  Dunn, James A.

  Litterick, Tom

  Spriggs, Leslie

  Dunnett, Jack

  Lomas, Kenneth

  Stallard, A. W.

  Eadie, Alex

  Loyden, Eddie

  Stewart, Rt Hon M. (Fulham)

  Edge, Geoff

  Luard, Evan

  Stoddart, David

  Edwards, Robert (Wolv SE)

  Lyon, Alexander (York)

  Stott, Roger

  Ellis, John (Brigg & Scun)

  Lyons, Edward (Bradford W)

  Strang, Gavin

  English, Michael

  Mabon, Rt Hon Dr J. Dickson

  Strauss, Rt Hon G. R.

  Ennals, David

  Mc Cartney, Hugh

  Swain, Thomas

  Evans, Fred (Caerphilly)

  McDonald, Dr Oonagh

  Taylor, Mrs Ann (Bolton W)

  Evans, Gwynfor (Carmarthen)

  McElhone, Frank

  Thomas, Jeffrey (Abertillery)

  Evans, loan (Aberdare)

  McGuire, Michael (Ince)

  Thomas, Mike (Newcastle E)

  Ewing, Harry (Stirling)

  MacKenzie, Gregor

  Thomas, Ron (Bristol NW)

  Faulds, Andrew

  Maclennan, Robert

  Thompson, Georgs

  Fernyhough, Rt Hon E.

  McMillan, Tom (Glasgow C)

  Thorne, Stan (Preston South)

  Fitch, Alan (Wigan)

  McNamara, Kevin

  Tierney, Sydney

  Flannery, Martin

  Madden, Max

  Tinn, James

  Fletcher, Ted (Darlington)

  Magee, Bryan

  Tomlinson, John

  Foot, Rt Hon Michael

  Mahon, Simon

  Torney, Tom

  Forrester, John

  Mallalieu, J. P. W.

  Urwin, T. W.

  Fowler, Gerald (The Wrekin)

  Marks, Kenneth

  Varley, Rt Hon Eric G.

  Fraser, John (Lambeth, N'w'd)

  Marshall, Dr Edmund (Goole)

  Wainwright, Edwin (Dearne V)

  Freeson, Reginald

  Marshall, Jim (Leicester S)

  Walden, Brian(B'ham, L'dyw'd)

  Garrett, John (Norwich S)

  Mason, Rt Hon Roy

  Walker, Harold (Doncaster)

  Garrett, W. E. (Wallsend)

  Maynard, Miss Joan

  Walker, Terry (Kingswood)

  George, Bruce

  Meacher, Michael

  Ward, Michael

  Gilbert, Dr John

  Mellish, Rt Hon Robert

  Watkins, David

  1570

  1571

  Watkinson, John

  Willey, Rt Hon Frederick

  Wise, Mrs Audrey

  Watt, Hamish

  Williams, Rt Hon Alan (Swansea W)

  Woodall, Alec

  Weetch, Ken

  Williams, Alan Lee (Hornch'ch)

  Woof, Robert

  Weitzman, David

  Williams, Rt Hon Shirley (Hertford)

  Wrigglesworth, Ian

  Wellbeloved, James

  Williams, Sir Thomas

  Young, David (Bolton E)

  Welsh, Andrew

  Wilson, Alexander (Hamilton)

  White, James (Pollok)

  Wilson, Gordon (Dundee E)

  TELLERS FOR THE NOES:

  Whitehead, Phillip

  Wilson, Rt Hon Sir Harold (Huyton)

  Mr. Peter Snape and

  Whitlock, William

  Wilson, William (Coventry SE)

  Mr. Frank White

  Wigley, Dafydd

  Question accordingly negatived.

  DOUBLE TAXATION RELIEF (UNITED STATES OF AMERICA)
  10.32 p.m.
  The Minister of State, Treasury (Mr. Denzil Davies): I beg to move,
  That an humble Address be presented to Her Majesty, praying that, on the ratification by the Government of the United States of America of the Convention set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (United States of America) Order 1976, a draft of which was laid before this House on 14th April 1976 in the last Session of Parliament, an Order be made in the form of that draft.
  With your permission, Mr. Deputy Speaker, and for the convenience of the House, I suggest that we might debate at the same time the following similar motion relating to double taxation:
  That an humble Address be presented to Her Majesty, praying that, on the ratification by the Government of the United States of America of the Protocol set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (United States of America) (No. 2) Order 1976, a draft of which was laid before this House on 9th November 1976 in the last Session of Parliament, an Order be made in the form of that draft.
  Both motions relate to a new double taxation convention with the United States. The new convention replaces the existing convention which dates from 1945 and has been modified on several occasions since then. Although many of the provisions of the new convention are similar to those contained in the earlier arrangements, there are several significant changes. Perhaps the most important relates to dividends.
  The treatment proposed for dividends flowing from the United Kingdom differs from that provided in other orders which have come before the House since the introduction of the imputation system of corporation tax in 1973. In these other orders the tax credit in respect of dividends paid by a United Kingdom company has been given only to portfolio investors in the partner country—that is to say, to individuals who are resident there and also to companies resident there which control less than 10 per cent. of the voting power in the United Kingdom company paying the dividend.
  Under the dividends article in the proposed convention with the United States, the tax credit will be given to
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  United States portfolio shareholders in a similar way to the other orders I have mentioned, but United States direct investors—that is corporations resident in the United States which control 10 per cent. or more of the voting stock of the United Kingdom company paying the dividend—will also receive a tax credit. In this case, however—that is to say, in the case of United States direct investors—the tax credit will be less than that payable to portfolio investors.
  In granting a tax credit to direct investors we are recognising that United Kingdom dividends paid to United States direct investors may find their way out of the corporate sector and into the hands of portfolio shareholders in the United States. This is because under our imputation system of corporate taxation the tax credit is the means by which relief is given for the economic double taxation which occurs when the profits of a company are taxed in its hands and taxed again when they are distributed to shareholders.
  The extent to which we are prepared to pay a tax credit to direct investors is of course a matter of balance having regard to the terms of the convention as a whole. As with the other terms of the convention, at the end of the day it is a question of weighing up the costs and benefits.
  The provision of the dividends article in respect of dividends flowing to the United Kingdom reflects the differences between the company tax systems in the United Kingdom and the United States. The United States has, broadly speaking, the same system as the United Kingdom had before the change to the imputation system in 1973. Under the new convention, the American withholding tax levied on dividends flowing from the United States to this country to direct investors will be 5 per cent. so long as we pay tax credits in the way provided for in the convention. The rate of withholding tax on other—non-direct—dividends will remain at 15 per cent., as in the convention at present in force.
  There are one or two other apsects of the new convention which I should mention briefly. Our petroleum revenue tax will qualify for tax credit relief in the United States. Also, we shall be able to tax in accordance with our domestic law gains made from the disposal of North

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  Sea licences—which we could not do under the existing convention.
  The new convention will eliminate the problems which were caused by various technical flaws in one of the articles of the existing convention—Article XV—which gave rise to effects which were quite unintended by both countries when the 1966 Protocol was agreed.
  There are two other provisions which are of particular interest. The first is designed to limit the power of constituent States of the United States to compute the State tax liability of United Kingdom enterprises doing business in their territory by reference to business activities of the enterprise which are unconnected with that State. The other provision is aimed at possible abuse of the convention by third country residents who choose to set up companies in either the United Kingdom or the United States solely as a means by which to secure the benefits of the convention.
  I should also like to mention the article of the convention which provides a remedy for the person who is being taxed both by the United States and by the United Kingdom and who considers that the taxation is not in accordance with the terms of the convention. This is Article 25—containing the mutual agreement procedure—and it enables the two Revenues to attempt to resolve the dispute by direct contact with each other.
  This procedure is, I understand, well known to international tax practitioners as the "Competent authority channel" and both we and, I believe, the Americans regard this channel as providing a very valuable means of ensuring the elimination of double taxation. We had a similar provision in the "old" convention, and it always worked well. I hope that the new provision—which is rather more elaborate than the old one—will continue to enable these problems of double taxation to be resolved satisfactorily.
  I ought perhaps to comment briefly on Article 17 of the convention—that is to say, the article concerned with the taxation of public entertainers who are residents of one country and work in the other. The treatment of entertainers under the present treaty—which dates back to 1946—has been changed by Article 17 and brought into line with the
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  recommendations of OECD to give the country in which the earnings arise the right to tax them however short the period of stay in that country.
  Those with relatively small earnings will not be affected but there will be an effect on those earning more than $15,000—or the equivalent in pounds sterling—in a tax year. But the effect on American entertainers coming to work here—for example, to make a film—would not normally be anything like as severe as some representative bodies were at first inclined to think. After discussions with the Revenue and after the article had been explained, they were quite satisfied that the provisions were not as severe as they thought.
  They are not as severe because of the reliefs available under the provisions of the Finance Act 1974 which the present Government introduced in connection with the taxation of "foreign emoluments". It is, of course, not a question of the entertainer having to bear tax in both countries on the same income. Double taxation is eliminated by the country of residence giving credit for the tax paid in the country where the earnings arise.
  In conclusion, I would like to say that the new convention with the United States represents a determined effort by both countries to have a convention which is fair to both countries with terms that are properly balanced. It conforms to the principles of the OECD model convention, and this is to be expected, bearing in mind the important part which both the United States and ourselves play in the deliberations of the Committee on Fiscal Affairs of the OECD. This is a major convention, and a great deal of effort and negotiating skill on both sides has gone into getting its terms right. I believe the terms to be very attractive to both British investors in the United States and American investors here, and I commend it to the House.
  If there are any points relating to this complex document which any hon. Member wants to raise I will, of course, do my best to answer them.
  10.41 p.m.
  Mr. Peter Hordern: The Minister has said that this is a major convention, and that is

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  so. It will have a profound effect on the flow of funds across the exchanges. He dealt in some detail with some of the provisions, and I am grateful for his explanation of Article 17, as I believe that it will produce some solace to those American visitors—film stars and pop stars—who had thought that their earnings were to be taxed at the United Kingdom rate.
  It is a most important convention, not merely because, as the hon. Gentleman hopes, it will serve as a model for future conventions, but because of its liberalising effect on trade between our two countries. I have some criticisms of the convention, but it should not be thought that simply because the debate is late at night the convention is in any way trivial. Hundreds of millions of pounds are involved across the exchanges.
  The United States has more investment in this country than the United Kingdom has in the United States. This advantage has been greatly strengthened by the massive investment in recent years by the United States in the North Sea. About £15,000 million has been invested in the North Sea altogether, but a great deal of it has come from American sources. We do not know what the price of oil will be in the next few years, but it is reasonable to expect that it will be higher than at present. We know what the interest charges on the loans so far extended will be.
  We hope that the oil companies will make substantial profits. The country will get revenue through corporation tax from North Sea oil and from the petroleum revenue tax. But the reduction of the withholding tax which the convention allows—or the increase of cash available to the American oil companies made possible by the convention—will inevitably mean much higher remittances to the United States. These remittances would have been very high in any case. The Treasury estimates concerning interest, profits and dividends accruing to overseas countries from North Sea operations are that the outflow will be £750 million this year, £1,250 million in 1979, and £1,750 million in 1980—rather more than double in just three years.
  The effective rate of withholding tax will now be 21·625 per cent. That is a
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  substantial reduction from the position under the imputation system as it existed before. So for this reason there will be much larger remittances to the United States. I have confirmed this point with one or two American oil companies. There will also be an incentive to increase the rate of distribution because the ACT element, and thus the part that can be reclaimed, increases with the amount of distribution.
  For example, if we compare a 25 per cent. dividend distribution with full distribution we get an effective tax rate of 48·77 per cent. on the 25 per cent. distribution, but a tax rate of only 39 per cent. on a full distribution.
  I do not deny that we shall also benefit by the substantial reduction in the United States withholding tax on British companies from 15 per cent. to 5 per cent. We shall certainly get higher remittances, too. But we shall get nothing like the remittances that will flow to the United States.
  My first question is: were the Treasury estimates of dividend and interest accruing to the United States from North Sea operations taken with this Convention in mind? If not, what will be the extra flow of funds accross the exchanges to the United States as a result of this substantial reduction in the witholding tax?
  The Minister of State must have these figures and it is right that the House should know what these estimates are. There is bound to be a massive flow of funds amounting, in all probability, to many millions of pounds as a direct result of this measure. Not just the American oil companies will be involved. There are about 2,000 subsidiaries of United States companies in this country. They have a book value of £5 billion. Their investment last year was said to amount to $4,218 million compared with $2,300 million just three years ago. The level of investment has been increasing very fast in recent years.
  These companies do not invest simply to help Britain's economy. They invest to secure a profit and to remit as high a proportion of that profit as they can. The effect, therefore, of reducing the withholding tax by some 40 per cent. will be to increase the other remittances to the United States by a substantial figure.

  1579
  The House should know what the Treasury estimates of this flow will be. In 1966 the Financial Secretary to the Treasury estimated that the loss to the Revenue on dividends maintained at that time would be only £6 million. He also took into account the effect of investment allowances, which accounted for another £23 million.
  The Ministers of State ought to tell the House what the present estimates are of the extra flow of funds that will occur by the reduction in the witholding tax. We are expecting a great deal from the North Sea. We only hope that the advantage to the balance of payments will be sufficiently large to meet the outflow of these remittances.
  It is reasonable to expect further United States investment here. I wish the same could be said about British investment in the United States. I recognise the substantial advantage for British firms of the witholding tax being reduced from 15 per cent. to 5 per cent. But, unlike American firms, which have to pay no penalty to invest here, British firms have to pay a premium of almost 50 per per cent. to invest directly in the United States. That means that scarcely any investment takes place by a straight transfer of funds.
  Money has to be borrowed in the United States, or through the Euro-dollar Market. That being so, it will be more to the advantage of British firms not to remit profits but to retain them in their United States subsidiaries. We make no complaint about reducing barriers to international investment. Indeed, we welcome it. But I trust that the Government are aware of the consequences, which, with regard to remittances, look like being far more favourable to the United States, and the US International Revenue Service, than to this country.
  So much for the economic effects of the convention. I now turn to some other matters that should be clarified.
  First, I turn to the film industry, to which the Minister of State referred. The Press has reported that there is considerable concern that, under Article 17, United States entertainers will face substantially increased United Kingdom tax bills on their earnings here. As I read Article 17, the word used is "may", and
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  I take it to mean, therefore, that Article 17 is permissive in its effect and that any change in the existing position could be brought about only by special legislation in the Finance Bill. I should be grateful if the Minister would confirm that that is the position.
  I hope that this position would also apply to United Kingdom entertainers in the United States, because the evidence is that the United States Internal Revenue Service takes a quite different view. It does not believe it right that companies should not be taxed if the purpose of forming them is to take control of the services of performers. It seems to have a rather different view of Article 17 than that which the Minister announced. It would be helpful if the Minister could say whether Article 17 is permissive, as it appears to be, and how the Government propose to treat it. I understand that it is to be treated under the Finance Act 1974 in terms of the treatment of American visitors here; that is to say, the same treatment as American residents. Perhaps the hon. Gentleman will confirm that.
  Will the Minister also tell the House about the position of third country partnerships, trusts or estates? Is the fact that a trust may not be resident in either the United States or the United Kingdom likely to mean that a United Kingdom resident may not receive the benefits of the convention on United States source income if the trust should be set up in another country—say, the Bahamas? I hope that the Minister will be able to say whether that is the case.
  Article 7 sets out the definition of "permanent establishments". As the term "United Kingdom" includes the Continental Shelf, under that article oil installations would seem to fall within the definition of "permanent establishments" and, therefore, would be taxable. I should be grateful if the Minister would confirm that that is the position.
  There is another small point in Article 8, which affects shipping. This article, incidentally, is the new one in the second draft Statutory Instrument which we are considering. Should not the convention specify exactly what is a ship? The House will recall that we had some trouble about the definition of an oil rig. Is an oil rig a "ship" for the purposes of this article?

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  I turn now to what I regard as a major point of friction in the convention itself. When the convention was released in December 1975, three years had been spent in negotiation, and this was because the introduction of our imputation system produced a much higher effective withholding tax on American companies. That was the reason for the renegotiation. But the original 1945 convention had itself been substantially amended by the 1966 protocol. Today, even before passing the 1976 convention by means of this draft Statutory Instrument, we are being asked to pass another draft Statutory Instrument—the Double Taxation Relief (Taxes on Income) (United States) (No. 2) Order—which incorporates some amendments and additions made by a protocol last May. So, even before we pass the first Statutory Instrument dealing with the convention as it was originally intended, we find ourselves amending it.
  Furthermore, discussions are still taking place on an amendment which concerns Article 9(4), which I call for convenience "the California case". At present, California imposes a tax on companies not by virtue of their operation in California alone but by the size of the total payroll of the company throughout the world. The State of Oregon does the same. It is plainly wrong that this situation should continue, and Article 9(4) attempts to put it right. I understand that this is due to be considered, as is the whole Treaty, by the Senate Foreign Relations Committee. So we cannot consider this article as firmly entrenched in the convention which we are asked to approve tonight. This is one major point which is yet to be ratified, and I ask the Minister to confirm that what I have said is correct. Perhaps he will also say when he expects the treaty to be ratified by the United States, because this is not the only matter in contention. Another matter is yet to be ratified.
  I refer to Article 4 on the definition of fiscal residence, and in particular to the withdrawal of Article 15 of the original 1945 treaty and the effects of the Strathalmond case which followed it. I understand that Mr. David Forster, International Tax Counsel to the Secretary to the United States Treasury, will soon be negotiating with the Treasury not only on the California case but on the effects
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  of the Strathalmond case. That concerns the position of what, in shorthand, I call the American wives—that is, the spouses of British citizens resident here.
  I understand that Mr. Forster addressed the International Tax Association in New York on 10th January and said quite specifically that there were two major items open for negotiation. One was the California case. The other was the effect of dropping Article 15 of the 1945 convention.
  The dropping of that article caused considerable dismay in the United States, and there is no doubt that the position of American wives of United Kingdom citizens in this country will be changed beyond recognition. I must, therefore, tell the Minister that we regard this treaty as transitional and subject to further amendment. No doubt it already is because of the California case.
  The point about the Strathalmond case was that it did not simply affect United States citizens in the United Kingdom but also affected the American banks. As a result of it the Special Commissioners have found that interest received on loans made by one United States bank to another was not taxable by the United Kingdom Inland Revenue, although that interest could be charged as an expense. The real reason—and it was quite justified—for the concern about the Strathalmond case was that the Revenue was losing large sums of money from the American banks, far more than it could ever hope to gain from taxing American wives on their world-wide income. There is, of course, a case for re-negotiation here, but these American ladies should not be made the victims of an attempt to block a serious tax loophole made by the American banks.
  I understand that a joint statement has been made today by the competent authorities in the United States and Britain to the effect that Article 15 of the 1945 treaty was never intended to have the consequences which followed the Strathalmond decision, and that the American banks should have been governed by Article 3. That statement, while helpful, does not, of course, have the force of law, and nobody would object if the Inland Revenue had put out a similar statement to the effect that the old Article 15 was never intended to have the effect seen in the Strathalmond case.

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  I do not think that American wives of British citizens should be altogether exempt from United Kingdom tax on money remitted and received here. That would be quite unreasonable. It would seem reasonable if they were taxed on income remitted to this country if they were domiciled abroad, and that was in practice the position of those United States citizens whose domicile had been accepted as being in the United States, even though they were resident here. Their income was taxed on a remittance basis, and that was the position before the Strathalmond case. I assume that it is correct that under the Domicile and Matrimonial Proceedings Act 1973 American women married to Englishmen after 1st January 1974 can still claim United States domicile, and if successful will be taxed on the remittance basis. It is also open to those who married before that date to try to establish domicile in the USA. Perhaps the Minister will confirm that that is the position.
  It is by no means easy to establish domicile abroad. In the Bullock case last year a Canadian who had lived here for 40 years was successful in proving that he was domiciled in Canada. I remember the Minister saying in Committee upstairs that it was extremely difficult to prove domicile, and that one of the ways was to buy a burial plot in the country in which one wanted to be domiciled. If this convention goes through there will be many more grave-diggers in the USA than there have been so far.
  The new agreement does not change the domicile position and does not change the basic remittance position. What it does is to remove the effects of the Strathalmond decision. It will ensure that a great deal of time and effort is taken up by American wives trying to establish United States domicile. It is right that we should consider their position. Of course they complain of the very high levels of tax in this country and the fact that their income is added to that of their husbands. Every Englishman complains of the same thing. What they also see is the different treatment of American men employed here by US corporations and the position of American wives of British subjects.
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  The House will recall that in 1974 the Government sought to impose United Kingdom tax on American employees working here if they had been here for five out of the last six years, and to impose tax on their world-wide incomes. There was an enormous row and huge protests from the entire American business community, who simply threatened to leave the country en masse. The banks said that they would leave the country. There were representations from the United States Ambassador and the officials of the Bank of England. The Government surrendered completely
  The position now is that those Americans working here suffer United Kingdom tax on only half of their salary here, and only on income remitted to this country, provided that they are here for not more than nine years, which is not a long time.
  Americans do not understand the subtle distinctions between domicile and residence. All they see is that American men get special tax concessions which are not available to American women, and they see this as blatant sex discrimination, as, indeed, it is.
  The Government have had to make tax concessions to American males in order to keep American business here. The underlying problem is the ludicrous rates of tax. If the tax was not so high there would be no need to make concessions to Americans or anyone else. Nor, if we had United States levels of tax, would there be any objection to tax on a world-wide income basis. As it is, there is bound to be considerable protest about this convention in the USA before ratification, because it appears to be a blatant piece of sex discrimination.
  I warn the Government that they will be under considerable pressure to modify the convention by a separate protocol. It seems anomalous that there should be a distinction between United States citizens who are domiciled here and those who are technically resident here. I think that the Domicile and Matrimonial Proceedings Act recognises this point—that those United States citizens who married United Kingdom citizens before January 1974 should be on the same basis as those who married after that date. I feel sure that there will be strong pressure to renegotiate this point.

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  I cannot pretend, therefore, that the convention is satisfactory as it is. Since it is open to ratification by the USA it would have been much better to have waited until these important points had been satisfactorily resolved. That is what we tried to persuade the Government to do. But we are not opposed to the main purpose of the convention, which is to liberalise trade, payments and investment between our two countries. If only the Government could introduce the same tax levels as exist in the USA, none of these problems would be with us. I fear that that is much to much to expect from this Government. That is why the convention is not as satisfactory as it should be and why we cannot give it the unqualified welcome that it would otherwise deserve.
  11.5 p.m.
  Mr. Peter Rees: The Minister of State has been, as always, patient and courteous in his exposition of a rather complex order. Normally, any order introducing a measure of double taxation relief is welcome to the House and should be let through without overmuch comment, but, as my hon. Friend the Member for Horsham and Crawely (Mr. Hordern) has so ably explained, this is an order of particular importance for a variety of reasons.
  First, I believe that it concerns the first major double taxation convention since the imputation system was introduced. As one who was privileged to be a member of the Select Committee that considered the various systems of dividdend, taxation, I naturally take a close interest in the order, particularly because one of the reasons which led the Select Committee to prefer the imputation system was that it appeared to give the balance of advantage to this country in renegotiating various double taxation conventions with other countries. Indeed, because this is the first major double taxation convention since the introduction of the imputation system, it may well prove to be a precedent for other orders. Therefore, it needs particular scrutiny by the House.
  Beyond that, the investments of this country in the United States and of the United States in this country are considerable, as are the personal ties between the two countries and the amount of emigration. Therefore, the range of
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  people, businesses and investments likely to be affected is large.
  On the face of things, there is an unanswerable case for the Government's early ratification of the convention and the consequent introduction of the order translating it into domestic law. I understand that the initial argeement was signed in 1975. Therefore, the Minister might argue that there has already been overmuch delay before the introduction of the order. But when I started to investigate the circumstances and the background to the order I developed a certain hesitation about it. I hope that the Minister will go a little more deeply into its general diplomatic background. It must be a matter of delicacy for him to describe what is happening on the other side of the Atlantic. Already one further protocol has had to be signed, which is embodied in the second order. I believe that that is very unsual in this kind of case.
  Secondly, the United States has not yet ratified the convention. I believe that the External Relations Committee of the Senate is due to be empanelled next month to consider it and take representations from various interested parties. So there can be no certainty of its ratification by the United States.
  Thirdly, there is considerable concern in the individual States, particularly California and Oregon, because their tax-raising powers are likely to be affected by the changes in the unitary tax system. The House would be assisted if the hon. Gentleman would dwell a little on those factors and give his view on whether the convention is likely to pass through smoothly in the United States.
  We understand that there are regular meetings between the United States Internal Revenue Service and the Inland Revenue. It would be interesting to discover whether the order is high on the agenda of matters to be discussed. It may be that both departments regard the matter as signed, sealed and delivered. If so, I suggest that neither has fully appreciated what is at stake.
  I pass from the diplomatic background to some of what my hon. Friend so attractively described as the points of friction in the order which must be of concern to those concerned with it professionally and commercially. In this

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  sort of order, it is important for us as the legislators for the United Kingdom to see whether a balance has been struck between the interests of this country and the interests of the United States. I am not asking that we should achieve a favoured position—that would be a juvenile approach to the matter—but we must see whether a fair balance has been struck between the portfolio and direct investments of both countries.
  The Minister dealt only cursorily with this problem, and I hope that he will explain the exact position in more detail later. How will United Kingdom portfolio and direct investments in the United States be treated?
  It is curious that the greater the quantum of distributed profits of a United Kingdom subsidiary of a United States parent company the greater the reliefs. Is this intentional or is it an accidental byplay? Has it been considered by the Inland Revenue? What lies behind it? Why is there to be this discrimination in favour of the subsidiaries of United States parent companies as opposed to branches? Are there deep economic reasons for this situation, or is it one of the hazards of fiscal legislation?
  I hope that the Minister will take a little more time to persuade us that there has been a fair distribution of tax burdens and tax reliefs between the two countries and those who operate in them.
  In electoral terms, entertainers and athletes may not be a significant group, but they are as entitled as any other group to a measure of justice. I wonder whether the Minister of State and those wo do his bidding have taken enough care to safeguard the interests of these people when they travel to perform in the United States. Why, for instance, are they denied the relief given under earlier articles to those who perform services in America for less than 183 days in any year? Why should entertainers or athletes who go for just a week or so be denied that relief?
  What is the crucial distinction between dependent and independent services? I do not believe that this phrase has ever appeared before in domestic United Kingdom legislation, although there may be an OECD precedent. It would be helpful to hon. Members and those who
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  study our debates on such esoteric matters if the Minister of State told us the difference between dependent and independent services.
  In this context, what is a "fixed base"? If a pop star performs in California and, in order to avoid being mobbed, takes a house there for the duration of his stay, will this be a fixed base? There are such points of ambiguity on which the Minister owes us a more detailed explanation.
  The American wives of United Kingdom residents or nationals are another group which are not significant in electoral terms; the social fabric and economic structure of this country does not stand or fall on what we do to them in fiscal terms, but they are as entitled to a measure of fiscal justice as any other group in this country. I wonder whether the Minister of State or anyone at Somerset House takes a close interest in such problems.
  There is an uneasy feeling among those who study these matters that the Inland Revenue, having lost the battle with Lady Strathalmond, has chosen to fight that battle over again through this order. That is a rather unattractive way of attacking a very small problem. I believe that in these cases a measure of broad generosity is what we require of the Government. Why is it that an American lady who retains her American nationality but is regarded as domiciled here under the curious domestic provisions of our private international law is now to be subject to tax on her worldwide income? Why is she denied the sort of relief which, as my hon. Friend the Member for Hordern and Crawley so perceptively pointed out, is accorded to an American employee who may be resident here but retains his American nationality and is regarded as domiciled in the United States?
  The Minister of State may say that this problem has been entirely solved by the Domicile and Matrimonial Proceedings Act 1973. But good lawyer as he is, he will recognise that that affects only those ladies who have married since 1973. The hon. Gentleman may say a little ungenerously, and with uncharacteristic lack of chivalry, that those who married before that date are a small and dwindling group. Nonetheless, they form

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  an important group for which we must have a little care.
  Must they take some dramatic step, such as abandoning their husbands for a period of years and buying a house in the United States so as to re-establish their American domicile? This is a matter that could have been solved a good deal more simply and with more generosity.
  It may be that the Minister of State will say that these ladies benefited only by a side wind when the 1966 double taxation convention was introduced. We can only speculate on the motives that led to the introduction of that convention. We know that questions of governmental face come into these matters. The Government may be a little reluctant to withdraw the order, but as the whole matter will soon be at large, especially if it is opened up in the United States Senate, perhaps the hon. Gentleman will promise to come before the House with a protocol dealing a little more generously with this small but important problem.
  Beyond that there are matters of technicality but still of importance. There is the issue of North Sea oil, which looms large in our debates at present. The companies operating in the North Sea are anxious to know whether a drilling rig, for instance, should be regarded as a permanent establishment. The words of the hon. Gentleman, well considered though they may be, will not determine these matters in the courts of law, but it would be of assistance to those who may tender for further blocks in the North Sea if they could discover their exact fiscal position. I have no doubt that they would pay close attention to the Minister of State's words. Perhaps he will say briefly and with his normal succinctness whether he believes that a rig should be regarded as a permanent establishment. Will a drilling company operating in the North Sea be exposed to tax on all its profits from those operations?
  We must also consider partnerships. This is always an arcane, obscure and difficult area. Perhaps the Minister will share his thinking with the House. Contrary to United Kingdom domestic law, it seems that a partnership is to be regarded as a body of persons resident in a particular country. Resident where? What if a partnership contains a United
  1590
  States national, a United Kingdom national and perhaps some foreigner? Where would such a partnership be treated as resident? What happens if the main business of the partnership is controlled from Nassau but it happens to have a branch operating in this country or the United States? Where would that partnership be regarded as resident? Where would it be treated as carrying on its business?
  These are difficult matters, and I do not criticise the Minister of State for not having tackled them in his opening speech. But before we let slip through our hands this difficult and complex order, it is only right that we should press the hon. Gentleman more closely. My hon. Friends who are assiduous in studying these orders will no doubt wish to raise the matters that I have mentioned as well as others if they catch your eye, Mr. Deputy Speaker.
  I suggest that the order possibly needs a little closer scrutiny. One general observation, if I am permitted to make it while keeping within the rules of order, Mr. Deputy Speaker, is that, while I am not one for depreciating and denigrating the political institutions of this country, I wonder whether in the United States they do not handle complex technical matters of this sort in a more sensible way. I wonder whether the proper way to have dealt with this order would not have been through some sort of Select Committee, which could have heard evidence from the interested parties so that the House could then have judged in a dispassionate and non-partisan manner the merits of the order. I wonder whether all these important points have been fully considered by the technical experts who sit in the Official Box behind your right shoulder, Mr. Deputy Speaker, who, on the whole, with great ability and integrity consider these matters on our behalf.
  It is not sufficient to be reassured by the Minister of State that all possible representations made to Somerset House have been carefully weighed and that all the objections have been met. I know that our civil servants are people of great devotion to duty and have great skill and deep learning, but, at the end of the day, these are matters of political judgment for us to weigh on the evidence. We cannot delegate these matters to our civil

  1591
  servants, however detached, industrious, and honest they may be. These are matters for us. I believe that it would be better if, like a committee of the United States Senate, we were able to weigh these matters ourselves and not have to rely on verbal assurances by the Minister of State or on a chance letter to us.
  I suggest that the Leader of the House—not the Minister of State, because I recognise that he has a limited influence in this sphere—would be well advised to attend our debates on these small esoteric matters, because they often show up matters of considerable constitutional importance. If the Leader of the House were to study our debate tonight, he might have food for thought. I suggest that he might pause to consider whether we handle these matters as expeditiously, carefully and skilfully as the legislatures of other Powers. I say that with a certain diffidence and almost humility, because I was taught to believe that we ordered these matters extremely well in this country. However, I wonder whether we ought to update our constitutional procedures. With your characteristic generosity, Mr. Deputy Speaker, you have allowed me to stray outside the strict rules of order.
  I suggest that, against that background and the possibility—not the probability—that the Minister may be here in six months introducing eight new protocols embodied in eight new orders, he should consider withdrawing the order tonight. After all, it would be wrong to ask the House to rush in where senatorial angels fear to tread or, if not fear to tread, at least prepare to tread with more circumspection than the Minister has shown tonight.
  11.23 p.m.
  Mr. John Page: I read these Statutory Instruments with great care, but I have to say that my understanding was not completely clear afterwards. I felt rather as the accountancy student felt after listening to a high-level lecture by a professor: he confessed that he was still confused, but at a much higher level. Having listened to the interesting and extremely clear speeches made by my hon. Friends and by the Minister of State, I am in much the same state of confusion.
  1592
  I should like to ask the Minister two simple, straightforward questions. The first concerns Article 10. Will he confirm that the treatment of profits made by British firms in America is identical with the treatment of profits made by American firms in this country? In particular, is there any difference between the treatment of distributed and non-distributed profits? It is important to have that made clear.
  The United Kingdom is by far the largest overseas investor, except for the United States, of any industrial country. I assume that the proportion will be similar for the United States. That is important because of the doubts in the minds of those involved in international business that the treatment is not completely even-handed.
  My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) put the position of American wives brilliantly. Perhaps the Strathalmond case ruling produced too favourable a result for the spouses, but it seems that the pendulum has been pushed too far forward. I find it extraordinary that these Statutory Intruments have been brought before the House before negotiations with the United States have been concluded.
  Mr. Denzil Davies: Negotiations with the United State Internal Revenue Service have been completed. The only process left is ratification by the legislature in the way we seek tonight.
  Mr. Page: The Minister appears to have a remarkable view of proceedings. Of course negotiations have been completed by the Internal Revenue but it is subject to ratification by the Senate. Considerable discussions there could result in further legislation.
  Mr. Denzil Davies rose——
  Mr. Page: The Minister will have a further opportunity to speak.
  I wonder whether the orders are unamendable in the United States as they are here. If they were amendable, we could have a fair and proper discussion. I hope that the Minister will assure us that the Government's mind is not closed.
  11.28 p.m.
  Mr. Nicholas Fairbairn: I am particularly concerned about the taxation of American

  1593
  wives. I have no interest to declare—I do not have an American wife and I do not believe that there are any in my constituency—but, as a matter of justice, this is an issue of importance.
  I was impressed by what the Minister said, although he said it—unusually for him as a distinguished lawyer and hon. Member whom I respect—more because of what he had been advised to say than because of what he thought was wise to say. I was impressed by the argument of my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) and by that advanced by my hon. and learned Friend the Member for Dover and Deal (Mr. Rees).
  The Minister will certainly not find the answers to my questions in his brief, but it is important that such matters be considered. The question of the three matters—entertainers, the California situation and the Strathalmond case—was raised by my hon. Friend the Member for Horsham and Crawley. Is it or is it not the case that these matters are subject to negotiation at the next meeting of Finance Ministers in nine days' time? If not, upon what basis am I informed that Mr. Forster said that these three matters of protocol were still subject to discussion?
  If the order goes forward tonight, is that likely to prejudice the negotiations on these three matters, whenever they occur? If it will not prejudice them, why not? It seems to me that it would prejudice them.
  I am considerably concerned about the prejudice that will arise—I know the situation that existed before the Strathalmond case—in the differentiation between those who are wives, who happen to be American citizens, of British subjects and those who happen to be American males. The Labour Party has been devout in its concept that men and women should be treated equally, and equally devout in the concept that all races should be treated equally, although if they are distinguished in colour and tongue it is sometimes easier to make that distinction.
  It is the fact, however, that under the order American wives will be treated differently from American males. The only possible justification upon which one can base that is the old concept that the
  1594
  wife is a chattel and is somehow united as a unum quid with the husband if she happens to be mug enough to marry him. I do not see how it can be regarded as just by the Labour Party—and I am sure not by a lawyer of such distinction as the Minister—that a woman who happens to be married to a British persona—number of my hon. Friends have said "English person" as if it was inevitably consequential—should have the whole of her income aggregated for tax here, whereas a man who happens to be married to a British woman does not suffer that penalty. That seems to me a grave and difficult distinction to justify, particularly in the light of all the law that we have passed, if in no other time. in this Parliament.
  Will the Minister justify why he thinks that it is right to put forward an order tonight under which the whole income which is not brought to this country of a woman who happens to suffer being married to a British husband should be taxed, but the whole income of an American man who happens to suffer being married to a British woman and is resident in this country should not be taxed? I should like a simple answer to that question.
  I respect the Minister because he is not like the Secretary of State for Defence, who appeared incapable of either understanding or answering any question that was put to him this evening. It is a simple question and I should like a simple answer. Why is that justified? Why is it right that an American wife should have income which never comes to this country taxed in aggregate with her husband's, which at 98 per cent. means confiscation, whereas her husband should not have if affairs are in reverse? Is sex discrimination still part of the fiscal policy of the present Government, or is it not? If they have not thought that matter out, I think that they should.
  Secondly, why is it that the American negotiators at this month's negotiations considered that the three matters outstanding were subject to negotiation and that the Government take the view that they are not? Why should we pass an order tonight which appears to be final and which would have to be rectified if the matter is still one of dispute and negotiation?

  1595
  It is a matter that concerns only a small number of people. It concerns only those who happen to be resident wives in Britain. They may be a small number, but I have always understood that if the Labour Party stands for anything, it stands for the rights of minorities and for the concept of justice and equality.
  The question of equality is a matter of debate in the country of the nationals we are considering. There is not the slightest question but that those who have had the misfortune to be born as women and who have had either the judgment or the misjudgment to have married British citizens and to have come to reside here will be punished in a different way from those who happen to have a different sex or a different domicile. That in all equity must surely be wrong, and if the Minister can justify it, I hope that he will. I am sure that he cannot justify it and, for the very cogent and much more informed reasons that my hon and learned Friend the Member for Dover and Deal and my hon. Friend the Member for Horsham and Crawley adduced, I think that the Government would be wise to withdraw the order tonight, to reconsider it, and to enter into the negotiations which both sides want before reaching a conclusion which will be proved to be wrong, which may be prejudicial to the negotiations which will take place, and which will inevitably have to be amended at a later stage, possibly at a cost of much pain and embarrassment.
  11.37 p.m.
  Mr. Nicholas Winterton: I shall be very brief, because I do not pretend to be able to fathom all the intricacies of tax and double taxation and conventions such as those we are debating.
  One of the duties of a Member of Parliament is to represent his constituents and, whether he has many constituents affected by a measure such as this or very few, it is only right that the case should be heard. I therefore fully support all the views advanced by my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) and also the very eloquent speeches of my hon. and learned Friends the Members for Dover and Deal (Mr. Rees) and for Kinross and West Perthshire (Mr. Fairbairn).
  1596
  The Minister seemed to imply that this treaty had been ratified. It has not been ratified. I hope that I am correct in saying—perhaps the Minister will confirm this—that the United States Treasury officials are willing to discuss the problems of American wives here in the United Kingdom and the concept of an amendment to the treaty at their meeting with their counterparts in the United Kingdom later this month. I hope that the Minister of State will be prepared to confirm that this is the case and that the treaty is not likely to be ratified until, perhaps, February or March and that the United States Senate will be discussing many of the problems that have been raised in the House of Commons and that are being raised in the United States.
  The complaints that have been lodged with me and the representations made to me are that many people were unaware that the measure was to come before the House and that inadequate discussion has taken place. I fully share the view expressed by my hon. and learned Friend the Member for Dover and Deal that these complicated matters would be best discussed by a Select Committee, when all necessary evidence could be taken and considered in an unhurried way. The House has been caught almost by surprise by this debate. Many people who have made representations to me believe that there has been inadequate consultation. Many thousands of people are affected and their case should be properly heard.
  The Minister, who has considerable respect on this side of the House, is a learned lawyer. I believe that he thinks that the measure is inadequate, and I hope that he will take up the challenge of my hon. and learned Friend the Member for Kinross and West Perthshire. The best and most just thing he can do is withdraw the order, allow for more adequate discussion and bring it back when the views on those of the other side of the Atlantic are better known.
  The Minister should understand the position particularly of the American wives in this country who will be hardly hit. I know that, like the Chancellor, he believes that rates of taxation in this country are penal. The order is final so far as this House is concerned, despite discussions which may necessitate a

  1597
  further debate. Our case is fair, and I hope that the Minister will accede to it.
  11.42 p.m.
  Mr. Ivor Clemitson: The hon. Member for Macclesfield (Mr. Winterton) said that he was not very well briefed on taxation matters, and I am even less so, but, as he also said, one should take an interest in these matters if they affect one's constituents. By far the largest company in my constituency is a wholly-owned subsidiary of an American company, General Motors. I am concerned about the effect, if any, of the order on the payment back to the United States of dividends from the British company. Will the order give a greater incentive to that company and others to distribute profits in the United States in the form of dividends, or to reinvest them? Clearly, it is in the interests of my constituents that any profits should be reinvested in this country so that jobs are preserved.
  Before Christmas I asked a question which had been brought to my attention by a friend of mine who is an accountant. Could the Minister confirm that in the event of a maximum distribution of dividends the effective corporation tax payable by a United Kingdom subsidiary of an American company will be 42 per cent. and not the full rate of 52 per cent. as in the case of a wholly British company?
  11.44 p.m.
  Mr. Denzil Davies: There has been some confusion, if it is not disrespectful to say so, about what has and has not been agreed with the United States. The United Kingdom Executive has agreed with the United States Executive on the terms of a draft convention. The terms are embodied in the order, which has been presented to the United Kingdom legislature for ratification or otherwise. The same convention is being or has been presented to the United States legislature for ratification.
  It is not a question of negotiations continuing between the United Kingdom Executive and the United States Executive. The next process is ratification by each legislature according to its own rules and procedure. The fact that the United States Senate and Congress have not ratified does not mean that we should
  1598
  wait until they have. Why should not they wait until we ratify? No double taxation agreement would ever be ratified on that basis.
  Mr. Fairbairn: To which Senate or House of Representatives is the convention to be presented? I understand that a new administration is to take office in 10 days' time. The convention will not be presented before then, and all legislation in America falls, as it does here. How can the Minister say that the American legislature has the convention before it to be ratified?
  Mr. Davies: The hon. and learned Gentleman asked me detailed questions about taxation law which are extremely difficult. He now wants me to tell him how the United States legislature orders its affairs. I am not in a position to say.
  Mr. Fairbairn: The Minister should be.
  Mr. Davies: No, I should be foolish to try to do so. The United States legislature will be asked—or perhaps has been asked—to ratify the treaty. If it is ratified by us and by the Americans, it will become a double taxation agreement and convention between us. No doubt the United States Congress will debate these matters as we are doing tonight. It may like or dislike the treaty, but the question for us is whether on the basis of the agreement which the Executives of the two countries have reached we think it is a fair treaty in the interests of the United Kingdom as a whole.
  The hon. Member for Horsham and Crawley (Mr. Hordern) and my hon. Friend the Member for Luton, East (Mr. Clemitson) asked about income being remitted from this country with particular reference to North Sea investment as a result of the half tax credit given under the convention to American direct investment. Under our imputation system, without the convention there would be less incentive for inward investment in the United Kingdom. The hon. and learned Member for Dover and Deal (Mr. Rees) and I were on the Select Committee that discussed the matter.
  To be a little disrespectful to one of our Common Market colleagues, the imputation system was invented by the French to be beastly to the Americans. It was designed to make inward investment unattractive. The imputation system

  1599
  makes it less attractive to investors because they may get back less money in dividend. On the other hand, the agreement we have negotiated moves a little bit away from the pure imputation system. It does not go all the way back to the old system but half way. It gives slightly more incentive for inward investment in this country.
  We have to balance the fact that more dividends can be remitted abroad to the inward investor against the attraction of inward investment into the country. New inward investment from the United States would also create a considerable number of jobs, which we want to see. We have to balance that against the need to ensure that all the profits are not remitted.
  The substantial inward investment in the North Sea by American companies benefits enormously—and will do so increasingly—United Kingdom finances and the balance of payments. We cannot approach this from the basis that the imputation system is perfect from an insular point of view. The imputation system would militate against inward investment, and it has been slightly modified in respect of the United States.
  Mr. Clemitson: What my hon. Friend is saying is that the effect of the agreement on a subsidiary American company already in the United Kingdom will be to act as an incentive for the company to return more of its surplus to the United States rather than to re-invest it over here. Will it not act as a disincentive to re-investment?
  Mr. Davies: No, I do not think that one can try to distinguish between existing investment of an existing company and new, fresh investment. An existing company is all the time considering fresh investment. I am sure that the great firm in my hon. Friend's constituency is still considering new investment, and whether the masters in Detroit, or wherever it may be, will want to consider it will depend on the taxation policies of this country. By moving away from strict imputation systems, we shall be encouraging the kind of inward investment that my hon. Friend wants to see.
  Mr. Hordern: Would the hon. and learned Gentleman give the figures? In 1966, the then Financial Secretary to the
  1600
  Treasury gave the figures of remittance outflow across the exchanges. The hon. and learned Gentleman must know the figures of the outflow of dividends to the United States. What outflow does he think will occur as a result of this measure?
  Mr. Davies: I cannot say what extra outflow, if any, is likely to occur. It depends on the dividend policies of the companies concerned, their need to invest their profits, and so on. It is impossible to work out how much extra may be remitted to the United States as a result of the measure. I cannot give the House figures of that kind.
  The hon. Member for Horsham and Crawley raised a point, under Article 17, about the film industry. He asked whether the article was permissive. Part of it is. I understood him to be referring to the part relating to companies. In other words, if an American film star came here and did not get paid himself for his services but was employed by a non-resident company and the money was paid to that company, under our law, if the non-resident company was operating here—it probably would not be—we would have no power to pierce the corporate veil and look beyond to find where the money was actually going. In the United States, the authorities have not been so squeamish, and very often they look through companies. In such cases, therefore, the provision is permissive. If there were any change, it would have to be done through our domestic legislation.
  The hon. Gentleman asked whether trusts established in the Bahamas will benefit under the convention. The answer is that they will not. The convention is only concerned with giving benefits to trusts established in the two contracting countries. It would defeat the object to give the benefit to tax havens, such as the Bahamas.
  The hon. Gentleman also asked whether oil installations or drilling rigs were permanent establishments. I am not going to give legal advice from this Box to any company. It is a question of fact at the end of the day. But I should have thought generally that an oil installation or a drilling rig would come within the terms of being a permanent establishment. But that will be subject to the facts of a particular case.

  1601
  In general, I think it may be argued that such things are permanent establishments. I was also asked whether oil rigs were ships. I shall not answer that, but no doubt some are and some are not.
  The next question related to the Californian State tax levied on a unilateral basis. The difficulty here is that a United Kingdom company with a subsidiary operating in California is at the moment taxed by the Californian State authorities on what is known as a unitary basis. It pays tax not necessarily on the actual profits made in the State but on the apportionment of the world-wide profit by reference to certain activities in California. In other words, the Californian legislature has passed a law not taxing the entity on what it necessarily does in California but looking at the world-wide activity.
  In that kind of situation the agreement provides that a United Kingdom company will now be taxed in California on an appropriate measurement of its profits in the State of California. Otherwise more tax might be paid than would be reasonable or just. I would have thought that the House would welcome this. Most of the United Kingdom companies operating in California or Oregon would welcome that, but it is all subject to the ratification of the United States Congress.
  Several hon. Members drew attention to Article XV of the previous Treaty and to the problem of American wives—the Strathalmond case. It is not a matter of discrimination against a man or woman, subject to the domicile point that I shall come to. The point is that up to 1966, as I understand it, and now under the new agreement, an American citizen resident in this country would have borne United Kingdom tax on dividends arising in the United States. Credit would no doubt have been given before 1966 and credit will be given now under the new agreement for any American tax payable on these dividends.
  However, as a result of the Strathalmond case, which arose from an amendment in 1966 to the original treaty, it was decided that an American citizen resident in this country was not taxable in respect of American dividends and therefore not subject to British income tax. That was never intended in the original treaty. It only arose as a result
  1602
  of that amendment in 1966. It was one of the unintended consequences, but the Strathalmond case decided accordingly.
  What we are now proposing is simply that an American citizen resident in this country who receives dividends from the United States shall be taxable to a United Kingdom tax. There is nothing reprehensible about that. That seems to be a perfectly normal proposition.
  Mr. Peter Rees: The Minister said that was not intended in the 1966 Convention. What can he adduce in support of that proposition? Can he refer to any passage in Hansard, or any document, or must we take it on trust?
  Mr. Denzil Davies: For the moment the hon. and learned Gentleman had better take it on trust. I shall write to the hon. and learned Gentleman and tell him why this was so, but I now want to get on and try to answer all the points that were raised.
  The domicile issue is subsidiary to the main point. That is slightly different because as a result of the Domicile and Matrimonial Proceedings Act, after 1st January 1974 a woman could choose a different domicile from that of her husband. An American lady resident in this country could in theory choose to keep her American domicile. I realise that would be difficult, because domicile is a question of fact. But I accept that there might be an instance when someone was domiciled in the United States despite the fact that she was living in this country at the same time.
  In that kind of case, after this treaty is ratified by both legislatures and if the woman is married after 1st January 1974, United Kingdom tax on American dividends will only be paid on the remittance basis. In other words, if the dividends are not remitted to this country, no tax will be payable. That will be different from the position before the Domicile and Matrimonial Proceedings Act 1973.
  Without entering into any commitment, we shall look at this. But I want to stress that that does not mean that we shall change it. We shall look at it within the confines of the Treaty to see whether it might not be possible to equalise the treatment of the pre-1st January 1974 with the post-1st January position. But I say that without commitment.

  1603
  The hon. and learned Member for Dover and Deal asked what was going on on the other side of the Atlantic. I think that he will recognise that I have said, as far as I know, what is going on there. The Congress will be asked to ratify.
  The hon. and learned Member then asked about Article 10 and dividends. A United Kingdom portfolio investor in the United States will suffer a 15 per cent. withholding tax. A United Kingdom director investor in the United States will suffer a 5 per cent. withholding tax. A United States portfolio investor in this country will get the full tax credit which a United Kingdom resident would get in relation to corporation tax, less a 15 per cent. withholding tax. A direct investor in this country—which is where the argument has arisen about the imputation system—will get half the tax credit, or 17·5 instead of 35, less a 5 per cent. withholding tax on the total. So we have gone half way in relation to direct investment. We have not gone the whole way. We have gone the whole way with portfolio investment. But there is parity of treatment between us and the United States.
  The hon. and learned Member asked what was the difference between dependent and independent services. I am afraid that I cannot give a very satisfactory answer. My understanding is that dependent services mean wages, remuneration for personal services provided by someone in the employment of someone else, whereas independent services are personal services not in employment, when a person is a sole trader providing personal services.
  Finally, the hon. and learned Member asked where a partnership would be resident. I am afraid that that is a question of fact in these cases. I cannot give him a definitive answer.
  I hope that I have dealt with all the questions that were put to me. I think that this is a fair and balanced treaty. Ministers always say that about almost every treaty, of course. But the interests of this country have been maintained.
  1604
  The United States is a very important investor in this country, and perhaps more so as a result of North Sea developments than previously, and we have to take that into account. We have also to consider our own balance of payments.
  On balance, I think that we have achieved a fair result. Assuming that the United States Congress ratifies, if this House ratifies, this will become the new double taxation convention between our two countries.
  Question put and agreed to.
  Resolved,
  That an humble Address be presented to Her Majesty, praying that, on the ratification by the Government of the United States of America of the Convention set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (United States of America) Order 1976, a draft of which was laid before this House on 14th April 1976 in the last Session of Parliament, an Order be made in the form of that draft.
  To be presented by Privy Councillors or Members of Her Majesty's Household.

  INCOME TAX
  Resolved,
  That an humble Address be presented to Her Majesty, praying that, on the ratification by the Government of the United States of America of the Protocol set out in the Schedule to the Order entitled the Double Taxation Relief (Taxes on Income) (United States of America) (No. 2) Order 1976, a draft of which was laid before this House on 9th November 1976 in the last Session of Parliament, an Order be made in the form of that draft.—[Mr. Denzil Davies.]
  To be presented by Privy Councillors or Members of Her Majesty's Household.

  PROCEDURE (SESSIONAL COMMITTEE)
  Ordered,
  That the matters of Questions to the Prime Minister, the operation of Standing Order No. 9, the eligibility of Members successful in ballots for Notices of Motions and Bills to take part in subsequent ballots and the tabling of Amendments to a Bill on the day it receives a Second Reading be referred to the Sessional Committee on Procedure.—[Mr. Stoddart.]

  EMPLOYMENT PROSPECTS (DUNDEE)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Stoddart.]
  12.3 a.m.
  Mr. Gordon Wilson: I initiated this Adjournment debate on declining employment prospects in Dundee for two reasons. The first is that the city is facing severe problems of a major nature which will have adverse effects on employment and the lives of my constituents. The second is that, until recently, the Government have failed to show any real and urgent appreciation of the extent of the problems.
  At the outset, I must make it clear that Dundee, in my opinion, has a tremendous industrial potential. The city occupies a strategic position and has an excellent location, a good reservoir of skills and fair communications. The long-term future should be good, provided that we can plan and act now in a constructive manner.
  There has been a mistaken assumption by the Government and by some commentators that the whole East Coast of Scotland is prosperous as a result of the recent oil boom. Unfortunately, that is not the case in respect of Dundee and, for that matter, Tayside as a whole and parts of Fife. The problems of Dundee in dealing with industrial structure mirror more closely those of West Central Scotland than the plusher areas like Aberdeen and Edinburgh. The situation facing Dundee and Tayside is not of recent origin, but, as I shall indicate later, it is becoming more serious.
  Compared with Great Britain as a whole, Tayside, of which Dundee forms part, is an area of low earnings and deteriorating unemployment rates and has had a poor record in recent years of creation of new job opportunities. In the recent report submitted by the regional council to the Scottish Office about employment prospects I understand that reference was made to the jobs which could be developed over the coming years, and I understand also that the Scottish Office thought that the prediction of the regional council was too optimistic.
  1606
  It is a pity that this has happened in contrast to the magnificent environmental attractions with which the region and the city itself are endowed. Many of our difficulties have emerged from Dundee's traditional dependence on the jute trade and textiles which have been in steady decline over the last few decades. While Dundee has been diversifying considerably—it was particularly successful from the post-war period up to the early 1960s—its success has always been eroded by the constant dripping of job losses encountered from the textile industry and certain other established activities in the town.
  During this period, the city failed to secure either by generation or attraction an appropriate share of new manufacturing employment. There has also been no compensating increase in jobs in the service industries and little new employment has, with some creditable exceptions, been generated by oil-related activities. Between 1972 and 1975 there was a loss of 1,500 manufacturing jobs. From 1963 to 1973 employment in Tay-side fell by 8 per cent. compared with a corresponding fall in Scotland as a whole of under 3 per cent. This is largely due to the fact that while the region lost jobs in both manufacture and agriculture, as in Scotland as a whole, there was no corresponding increase in the service industries. Indeed, if latterly there had been no increase in employment in local government, the health services and higher education there would have been an unprecedented fall in the service sector. Cuts in public expenditure now taking place, leading as they will to redundancies, will hardly help to rectify the imbalance. It is against this background that recent events will prove damaging.
  The Minister is aware of the announcements in recent months which could lead to an explosion in unemployment in the city, but for the record I shall detail them. In October 1976 there was 9 per cent. male and 6·2 per cent. female unemployment. In the meantime, under the 90-day rule, there is the prospect of 600 redundancies from NCR due to a switchover from mechanical to electronic products, bringing down the work force of about 1,300, 300 construction workers from Dundee District Council labour department, and the loss of 620 jute

  1607
  workers employed by Sidlaw Industries. In all some 1,520 workers face unemployment this year, and even leaving out of account the prospect of a rundown in the private sector of the construction industry, this could represent an increase of 20 per cent. in the number of jobless in Dundee.
  Indeed, such is the job starvation in the city at present that a new and expanding electrical plant manufacturing firm wrote to me in November, saying
  "Last week we advertised 14 vacancies in the Courier and Advertiser and had more than 400 applicants by 2 o'clock in the afternoon".
  The Minister is well aware of my view that much of Scotland's problems can be placed at the door of successive Governments and that there is need for new expansionist economic policies combined with investment of Scottish oil revenues in Scotland: but tonight I want to make some suggestions of a positive and what I hope is a helpful nature with the intention of helping Dundee specifically.
  Quite clearly, however, the overall position would be improved if the Government were to review their cancellation of the regional employment premium scheme and their decision to delay payments of development grants. Regional employment premium in Tayside is worth £4·8 million a year to the region's economy. It is a manpower subsidy and its withdrawal could lead either to further redundancies or to profit levels in the region being eroded, with the effect that investment would fall.
  Although innumerable efforts have been made to persuade the Government to grant the area special development status, not only by myself and by the hon. Member for Dundee West (Mr. Doig), who is present, but by the Chamber of Commerce, the district council, the region, and the trade unions, nothing has yet happened. The last request I received in this direction was a letter from the chairman of the National Cash Register joint shop stewards' committee on 12th October. So far these requests have been in vain, but I was encouraged to receive a letter from the Secretary of State stating that, although he could hold out no immediate hope, the prospect of special development status had not been entirely ruled out. I hope that in view of what is to happen in Dundee this year the
  1608
  Government will give further attention to that proposition.
  I turn to advance factories. With the jute closures and the surrender by NCR of its factories at Dryburgh, Dunsinane and Birkhill, Dundee will have substantial space for incoming industry. The difficulty will be to find enough footloose industries to fill the factories that have been vacated. With indications that the industrial base of the city might be capable of being widened through the building up or starting of smaller firms, there is, however, a shortage of smaller units.
  The Scottish Development Agency has plans for nest units of 2,500 square feet, but no indication is given of the starting date or completion. I should like the Minister to indicate what action will be taken to speed up these smaller units.
  I am also told that, due to a shortage of funds, it has not proved possible for the region to supply necessary water, sewerage, landscaping, or grading services for the development of the site at West Pitkerro. These services and access to electrical power are essential to make the site available for early development. Most new towns have 50 to 100 acres of serviced sites always available to industry, and I hope that the same facility could be provided in Dundee through the provision of finance by Government to the regional council and, where relevant, also by the district council.
  I should also like to say how appreciative I am to learn from a letter of 22nd December that the Scottish Economic Planning Department will make special efforts to persuade industrialists to seek new locations in Scotland and to visit Dundee with the hope of establishing factories in the city. Any further information that the Minister can provide on this would be welcome.
  Help is also required for infrastructural support. While progress is being made in the provision of a road network, there is still room for upgrading communications with the North-East. Economists at Dundee University have stated that the development of Tayside and Dundee could be impaired by lack of better harbour and air facilities.
  I ask the Minister to see whether finance can be found for upgrading of the airstrip, so that it can take charter

  1609
  aircraft to service industry in the city more reliably than at present, when its grass surface is frequently waterlogged. I should also like him to pay particular attention to the future of the Stannergate extension to the harbour, by provision of either roll-on/roll-off facilities or additional North Sea oil industry service quays. It would help if the Government could give a grant to the port authority. These projects, together with a definite promise of funds for the new Grove Academy, which is scheduled for 1978–79 as a replacement for the antiquated, divided and overcrowded premises now occupied by the school, would also be of great help to the construction industry, which is in the doldrums.
  Lastly, I should like to refer to the firm of Veeder Root. This firm has been involved in the production of mechanical counting units for petrol pumps and has invested over £1 million in the development and production of a British-made tachograph. Money has been spent in designing, tooling and marketing. The company says that it is prepared to invest another £1 million in the project if it proves successful. Unfortunately, because of a dispute within the TGWU, the tachograph regulations imposed by the EEC have not so far been applied to the United Kingdom, and the investment by Veeder Root has been rendered useless. The company has 50 employees in this sector, but could increase the number by 200 if the Government managed to have the ban lifted.
  I read with interest this week that Mr. Jack Jones of the TGWU had been successful in his intervention over the Meriden factory. I hope that the Government may be able to persuade him to use his influence within the union to get it to allow the use of the tachograph and thus bring about 200 additional jobs to Dundee. That would be of tremendous value to the community in the time of stress that we face in the coming year.
  The city needs help now. I understand from the correspondence I have recently received from the Minister that the Government have come to the conclusion that urgent action is needed. Considerable pressure has been applied in the city, not only from within the hon. Gentleman's own party but from other
  1610
  parties and other bodies, calling for action. We sometimes feel in Dundee that we are ignored compared with other areas. If the statements in the Minister's letter are correct, I have hopes that that will not occur in future, but we shall see.
  The city and the surrounding localities have all that it takes to build up a good and prosperous future. There is evidence of more local investment and initiative, perhaps more than ever before. Therefore, it would be wrong to be too pessimistic. But the structural difficulties that the city faces are such as to require immediate help from the Government.
  12.17 a.m.
  The Minister of State, Scottish Office (Mr. Gregor MacKenzie): We should be grateful to the hon. Member for Dundee, East (Mr. Wilson), who has put his case on behalf of the city of Dundee and environs very clearly tonight. I know from the correspondence I have received from the hon. Gentleman that he has been greatly concerned about the employment position. I have also been in correspondence with my hon. Friend the Member for Dundee, West (Mr. Doig), and have been in almost daily contact with my hon. Friend, who is also here tonight. Both have put to me the city's serious problems.
  The hon. Gentleman touched on a number of issues of considerable concern to his constituents. I can assure him of my personal concern and that of my right hon. Friend the Secretary of State, who knows Dundee pretty well. The hon. Gentleman can be satisfied that my right hon. Friend will certainly consider the problem. All of us worry about such problems, not only in Dundee but throughout Scotland. We know them to be the result of a deep and lasting recession, probably the most serious since the war.
  The position in Dundee has deteriorated in recent months. It is a matter of much concern to us. However, I was interested to hear recently that in the jute industry there are a number of unfilled vacancies. Therefore, we should bear in mind the hon. Gentleman's point that it is not all gloom.
  The hon. Gentleman mentioned the problems of NCR and Sidlaw Industries. In their own way they highlight the serious nature of the problems facing the

  1611
  city. Apart from the general effects of the recession, the hon. Gentleman and my hon. Friend have often reminded me that NCR is being obliged to reduce its labour force because, with the introduction of the latest technology, fewer people are needed to assemble its products. Sidlaw Industries is seeking to diversify its production in an effort to combat a continuing decline in the traditional jute industry. In order to remain competitive in its present markets and to make a success of its diversification, the company considers that it must rationalise its production and cut costs.
  These are difficult problems and they have to be faced if these industries are to survive in Dundee. It is unfortunate that these redundancies have come at a time when unemployment prospects in other industries are severely affected by the recession. I have been closely involved in many of the matters raised by the hon. Member. My right hon. Friend the Secretary of State visited the city in September and discussed the employment problem with the lord provost and representatives of the bodies most directly concerned with the industrial life of the city. Much has been done to try and alleviate the problems.
  My officials are currently making a special effort to persuade industrialists seeking a new location in Scotland to visit Dundee. I am grateful for the compliments the hon. Gentleman paid to the work of my staff. They are also engaged on an extensive programme of visits aimed at stimulating employment. Many of the larger companies have been visited to make sure that they are aware of the assistance which the Government can provide. A seminar was held in the city recently which was well attended and well received by local industrialists and at which we informed them of the assistance being offered by the Government.
  These special efforts to assist Dundee have been made over and above the continuing encouragement by the Government of new industrial investment in all parts of the country. I emphasise again, as I have done repeatedly in Scotland over recent months, that generous assistance is available through my Department's office in Glasgow for new projects and the expansion of existing facilities.
  1612
  The problems of Dundee are reflected in many other parts of Scotland and the Government are determined to bring down the level of unemployment in Scotland as quickly as possible. For the present we are unable to follow the traditional road to this end by reflating the economy. We have a balance of payments deficit and a high rate of inflation and these must be put right to provide a sound base for economic growth. Progress has been made and the recent measures will help to divert more resources to industrial investment and assist towns such as Dundee.
  In the meantime, much has been done to alleviate unemployment. The temporary employment subsidy, the Job Creation Programme and the recruitment subsidy for school leavers have made a significant impact. These measures have already created or protected over 2,000 jobs in the Dundee and Tayside area. The recently introduced job release scheme will provide further help.
  For the longer term, our strategy is to ensure that we direct more of our resources into manufacturing industry. This is essential if we are to remain in the forefront of trading nations. We should stimulate growth and establish an economic climate which should provide better opportunities for the nation as a whole. Dundee, which is of course a development area, will be well placed to benefit from industrial recovery, as it has done in the past. In addition to regional development grants, selective assistance under Section 7 of the Industry Act 1972, totalling £3·6 million has been granted towards capital projects designed to create or safeguard nearly 4,000 jobs in the Dundee area.
  We have already announced an increase in the resources of the National Enterprise Board and the Scottish and Welsh Development Agencies. There is also an initial allocation of £100 million for a new selective investment scheme. This is in addition to the £205 million already set aside to stimulate investment in certain key sectors of industry.
  The hon. Gentleman asked about factories and small nest units. The timing here is primarily a matter for the judgment of the Scottish Development Agency. I have noted his remarks and shall bring them to the attention of the Agency. No

  1613
  doubt the chairman will write to the hon. Gentleman on this subject. The chairman and the chief executive of the Agency have visited Dundee in recent months to see the situation at first hand and I am told that they hope that another Agency factory in Dundee will be occupied soon and that it will provide another 100 jobs. The Agency has also had discussions with the district council about the important problem of clearing derelict land.
  The hon. Gentleman raised the issue of special development status for the Dundee area. Many people feel that certain difficulties are best solved by increasing the status of the area. I have never believed that that is the panacea for all our ills. I sometimes wonder whether the granting of special development area status might be a little counter-productive. In the current situation it is worth bearing in mind that the real problem is not the incentives that the Government can give but the number of industries that may be steered into assisted areas. We shall take all these considerations into account.
  Unemployment is a factor in the degree of development area status but not the only one, as the hon. Gentleman well knows. These areas are constantly being monitored by the Scottish Office and the Department of Industry. The hon. Gentleman will not expect me to comment on the matter tonight.
  The hon. Gentleman asked about some specific problems in respect of Dundee harbour and the development that is proposed to take place at the Stannergate to accommodate a roll-on/roll-off terminal. This is a good concept. Authorisation for a project of this kind is a matter for my hon. Friend the Secretary of State for Transport. I understand that no formal application has yet been lodged, but I know that Department of Transport officials in Edinburgh will be happy to help in assessing any such proposals and discussing ways in which the viability of the scheme might be improved.
  The hon. Gentleman mentioned the development of the airstrip. He was referring, no doubt, to the proposal made by the regional council for a development which would cost almost £1 million. This has already received careful consideration by the Scottish Development Department. The regional council has recently
  1614
  been informed that in our view there is no justification on general aviation grounds for further development of the airstrip for air transport purposes at present. However, as I think the House will know, the Government are now considering the whole future of airport development in the United Kingdom in the light of the response to the consultative document on airport strategy in the United Kingdom. The Tayside Regional Council has submitted its views on the matter.
  The hon. Gentleman referred to Veeder Root and tachographs. This is a worrying situation that has been raised both by the hon. Gentleman and my hon. Friend the Member for Dundee, West. They will appreciate that there is much difficulty. I am sorry that the company is faced with uncertainty. It might offer very little comfort to the hon. Gentleman and my hon. Friend, but it is a matter that has much concerned me and my colleagues in the Department of Transport. I promise that I shall keep the hon. Gentleman and my hon. Friend closely in touch with the situation and that I shall report to them.
  The hon. Gentleman spoke about the general problem of the withdrawal of regional employment subsidy. I have to say that in deciding upon the abolition of REP the Government took into account the premium that is paid automatically to manufacturing establishments. We believe that for the most effective use of our limited resources a move to a more selective system of aid is necessary. Much of the money given out in REP goes to firms that would be competitive without it.
  It is surely better to spend the money selectively on schemes such as I mentioned earlier that we know will create investment and thus reduce unemployment. In addition, there is evidence that industrialists—I know this from my personal experience, having spoken to various organisations concerning developments in the region and regional employment grants—consider selective financial assistance towards the capital costs of projects a much more attractive incentive than REP.
  The hon. Gentleman naturally raised the problem of the jute industry. I am aware of the general concern felt on Tayside about the level of imports. The

  1615
  hon. Member for Dundee, East did not raise that matter tonight, but both he and my hon. Friend the Member for Dundee, West have raised it with me from time to time. Measures for preventing abuses have been considered by my right hon. Friend the Secretary of State for Trade. I understand that he is in close touch with the interests concerned about this matter in the city of Dundee and that he will continue to keep a close watch on the situation.
  On the last point made by the hon. Member for Dundee, East—a matter constantly brought to my attention by my
  1616
  hon. Friend the Member for Dundee, West—all is not total gloom. I have seen great improvements in the city of Dundee. It is an attractive place. I understand the problems mentioned by the hon. Member for Dundee, East. However, given an upturn in the economy—there are signs that it is now under way—I believe that Dundee is well placed, with the facilities that it has available and planned, to benefit quickly from the upturn to which we all look forward.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes to One o'clock.

TRANSPORT
  A23 (Improvements)
  A23 (Improvements)
  Drivers' Hours
  Drivers' Hours
  Seat Belts
  Seat Belts
  Railway Commuters
  Railway Commuters
  Hythe High Street
  Hythe High Street
  Traffic Commissioners
  Traffic Commissioners
  Motorways (Resurfacing)
  Motorways (Resurfacing)
  Vehicle Excise Duty (Lorries)
  Vehicle Excise Duty (Lorries)
  Oil Supplies
  Oil Supplies
  Motorway Safety
  Motorway Safety
  Speed Limits
  Speed Limits
  Ports (Motorway Links)
  Ports (Motorway Links)
  Road Building Programme
  Road Building Programme
  Tachographs
  Tachographs
  A21 (Improvements)
  A21 (Improvements)
  Railway Unions (Consultations)
  Railway Unions (Consultations)
  London Rail Co-ordinating Committee
  London Rail Co-ordinating Committee
  Humber Bridge
  Humber Bridge
  Railways (Capital Expenditure)
  Railways (Capital Expenditure)
  Heavy Lorries
  Heavy Lorries
  Railway Accident (Shippea Hill)
  Railway Accident (Shippea Hill)
  Bus Lanes (London)
  Bus Lanes (London)
  Rural Bus Services
  Rural Bus Services
  Lorry Routes (Peak National Park)
  Lorry Routes (Peak National Park)
  Motorway Service Areas (Accounting)
  Motorway Service Areas (Accounting)
  Motor Insurance
  Motor Insurance
  Beverley South-West Bypass
  Beverley South-West Bypass
  M18
  M18
  Travel Costs
  Travel Costs
  Statistics
  Statistics
  Bedford-Moorgate Line (Electrification)
  Bedford-Moorgate Line (Electrification)
  Electrification
  Electrification
SCOTLAND
  Haddock Quota
  Haddock Quota
  Scottish Development Agency Factories
  Scottish Development Agency Factories
  Stonehouse New Town (Development Corporation)
  Stonehouse New Town (Development Corporation)
  Greater Glasgow Health Board (Staff)
  Greater Glasgow Health Board (Staff)
  Scottish Health Service
  Scottish Health Service
AGRICULTURE, FISHERIES AND FOOD
  Welsh Federation of Sea Anglers
  Welsh Federation of Sea Anglers
  Hill Farmers (Compensatory Payments)
  Hill Farmers (Compensatory Payments)
  Butter and Skimmed Milk (European Community Countries)
  Butter and Skimmed Milk (European Community Countries)
  Beef (Intervention Stocks)
  Beef (Intervention Stocks)
  Annual Review
  Annual Review
  Food Surpluses (EEC Intervention Stocks)
  Food Surpluses (EEC Intervention Stocks)
  Meat, Canned Fruit, Butter and Cheese
  Meat, Canned Fruit, Butter and Cheese
DEFENCE
  Airborne Warning and Control System
  Airborne Warning and Control System
EDUCATION AND SCIENCE
  Special Schools (Parents' Visits)
  Special Schools (Parents' Visits)
ENERGY
  Offshore Supply Office
  Offshore Supply Office
  Chadsmoor, Cannock (Explosion)
  Chadsmoor, Cannock (Explosion)
  Joint European Torus Project
  Joint European Torus Project
  "Atoms for Peace" (Salzburg Conference)
  "Atoms for Peace" (Salzburg Conference)
  North Sea Gas (Royalties)
  North Sea Gas (Royalties)
ENVIRONMENT
  Archaeological Objects (Conservation)
  Archaeological Objects (Conservation)
  West Midlands (Economic Needs)
  West Midlands (Economic Needs)
  Official Cars (Ex-Prime Ministers)
  Official Cars (Ex-Prime Ministers)
  European Community (Commission Docuument R/2908/75)
  European Community (Commission Docuument R/2908/75)
  Water Charges Equalisation Bill
  Water Charges Equalisation Bill
  Inner Area Studies
  Inner Area Studies
EUROPEAN COMMUNITY
  European Foundation (Tindemans Report)
  European Foundation (Tindemans Report)
FOREIGN AND COMMONWEALTH AFFAIRS
  Dominica (Independence)
  Dominica (Independence)
  European Cultural Activities
  European Cultural Activities
  Rhodesia (Terrorist Murders)
  Rhodesia (Terrorist Murders)
HOME DEPARTMENT
  Immigration (Marriages of Convenience)
  Immigration (Marriages of Convenience)
WALES
  Water Charges
  Water Charges
  Lesotho
  Lesotho
CIVIL SERVICE
  Official Cars (Ex-Prime Ministers)
  Official Cars (Ex-Prime Ministers)
OVERSEAS DEVELOPMENT
  Mauritius
  Mauritius
INDUSTRY
  Industrial Location Incentives
  Industrial Location Incentives
  European Regional Development Fund
  European Regional Development Fund
  EEC Regional Policy Committee
  EEC Regional Policy Committee
  Planning Agreements
  Planning Agreements
PRICES AND CONSUMER PROTECTION
  Food Prices
  Food Prices
  Price Code
  Price Code
TRADE
  Desalination
  Desalination
NATIONAL FINANCE
  £ Sterling (Value)
  £ Sterling (Value)
  Sub-contracting Certificates
  Sub-contracting Certificates
  Domestic Credit Expansion
  Domestic Credit Expansion
  Travel-to-Work Expenses
  Travel-to-Work Expenses
  Multinational Companies
  Multinational Companies
  European Community Documents R/1746/73 and R/2268/74
  European Community Documents R/1746/73 and R/2268/74
  Employment
  Employment
  Export Prices
  Export Prices
EMPLOYMENT
  Chronically Sick and Disabled Persons
  Chronically Sick and Disabled Persons
  Industrial Accidents
  Industrial Accidents
  Working Week and Annual Holiday (EEC Proposal)
  Working Week and Annual Holiday (EEC Proposal)
  Travelling Expenses (Employers' Payments)
  Travelling Expenses (Employers' Payments)
  Job Creation (Inverness-shire)
  Job Creation (Inverness-shire)
  Greater London
  Greater London
  Unemployed Persons
  Unemployed Persons
  Bank Holidays (Christmas and New Year)
  Bank Holidays (Christmas and New Year)
  Vacancies (Notification)
  Vacancies (Notification)
SOCIAL SERVICES
  Northamptonshire Area Health Authority
  Northamptonshire Area Health Authority
  "Health Trends"
  "Health Trends"
  Occupational Pensions
  Occupational Pensions
  Doctors (EEC Directives)
  Doctors (EEC Directives)
  Hospital Building
  Hospital Building
  Nurses
  Nurses
  Residential Care
  Residential Care
  Invalid Vehicles
  Invalid Vehicles
  Departmental Literature
  Departmental Literature
  Doctors
  Doctors
  Day Nurseries
  Day Nurseries
  Unemployment Statistics
  Unemployment Statistics
  Residential Care
  Residential Care
  Industrial Injuries
  Industrial Injuries
TABLE 3
  PRESCRIBED INDUSTRIAL DISEASES
  PRESCRIBED INDUSTRIAL DISEASES