§ Mr. Dellasked the Secretary of State for Defence, what arrangements have been made with the United States of America for the purchase of United States aircraft.
§ Mr. Denis HealeyThe Government of the United States have agreed to supply C.130E and Phantom F4 aircraft for the R.A.F. on the basis of Her Majesty's Government placing fairly small initial orders for both types of aircraft with an option to buy more aircraft up to the maximum number that may be needed as a result of the outcome of the current review of defence policy and commitments.
The R.A.F. will receive equal priority with the United States Forces in the delivery of aircraft and in the supply of spart parts, modification kits and other support services at the same production prices as those which apply to the U.S. Forces.
Special arrangements are being worked out for the procurement by the United 130W States in the United Kingdom of equipment that will be used in the aircraft production programme. These will include items such as Rolls Royce Spey engines, Martin Baker ejection seats and electronic equipment. Agreement in principle has also been reached for a major United Kingdom/United States co-production effort on the Phantom, and further discussions on the extent of this will take place. The arrangements also cover the installation of the Tyne engine in the C130 if, after investigation, this is found to be practicable and desirable.
In order to reduce further the effect on the United Kingdom's balance of payments the United States Government will arrange to make available credit facilities, at an interest rate of 4¾ per cent. to cover dollar costs. During the next three years dollar payments would be very small. The balance would subsequently be repaid at as constant a rate as possible over a period extending until about 1976. The total dollar cost will depend on the total number of aircraft bought, on which no decisions have yet been taken and no contracts placed, and the arrangements for the purchase of British equipment and for co-production of the Phantom. Detailed discussions with the United States Government about the initial aircraft orders, involving expenditure of up to £70 million (not all of which will be in dollars) on the purchase of aircraft and initial support equipment are now in hand. I will keep hon. Members informed of progress.