FIRST DAY'S DEBATE

§ The Secretary of State for Defence (Mr. George Younger)

I beg to move, That this House approves the Statement on the Defence Estimates 1986, contained in Cmnd. 9763.

§ Mr. Speaker

I have selected the amendment in the name of the Leader of the Opposition.

§ Mr. Younger

The provision of national security is the first task of any Government, and the defence plans of any responsible Government are bound to take a significant slice of the country's resources. It is important that those plans should be described and explained in detail, both to Parliament and to the taxpayer. As has become a well-established practice, this year's "Statement on the Defence Estimates" describes the nature and extent of the threat to the United Kingdom's security; sets out the policies of the Government and our allies in response; reports on the condition, strength and activities of the services; accounts to Parliament for the management of the defence budget and the Ministry of Defence; and provides a comprehensive range of background facts and figures.

However, national security depends to a very large extent on stability and continuity in defence policy. We must also move with the times. We must not only tailor our defence efforts to changes in the threat to our security; we must take account and advantage of developments in technology. Such changes can—indeed must—be based on continuity. A process of continuous upheaval and uncertainty could only reduce rather than add to our security. This evolutionary approach is graphically illustrated in successive statements from the Government. Their underlying theme is one of steadily improving defences within a consistent and stable framework of policy. Over the years, they have set out the essential background to our defence commitments and the rationale for the resources we devote to defence.

To hear some of this Government's less well-informed critics talk, one would gain the impression that our defences were on their last legs. Nothing could be further from the truth. In fact, defence has harvested the huge benefits that have flowed from the seven successive years of our commitment to the NATO real growth aim. We stuck to that commitment because it was imperative to repair the deficiencies that we inherited and to take account of developments in the threat we face. These developments are spelt out in successive statements. As the White Paper makes clear, Soviet military spending is accelerating. The Soviet Union has kept up its programme of modernising and improving its nuclear weapons, its land and air forces in Europe, and its increasing powerful navy. Unlike NATO, it maintains, and has dramatically increased, its ability to engage in chemical warfare on a large scale. Furthermore, Soviet weaponry is now growing in sophistication as well as in numbers: high quality is being added to sheer quantity.

NATO's response is well known and has been made very clear. We do not need to mirror the Warsaw pact's forces in every respect in order to preserve our own security. The NATO approach has been, and remains, consistent. It is the "twin track" of maintaining sufficient 713 military capacity to deter aggression combined with realistic, balanced and verifiable measures of arms control. I shall return to arms control a little later in my speech. For the moment, I want to concentrate on Britain's contribution to NATO which, as the White Paper reminds us, is a formidable one, and second only to that of the United States. In every respect, things are incomparably better than they were when we first took office. We are better organised. We have carried through the radical overhaul of defence organisation begun by my right hon. Friend the Member for Henley (Mr. Heseltine)—I pay tribute to my right hon. Friend for his outstanding achievements in this area — and consolidated the improvements that have been realised in the management of defence resources.

Our service men and women are better rewarded. We have transformed their pay and conditions of service to reflect the esteem in which they are held by this Government and by society as a whole. We have better reserves and we are expanding their numbers, increasing their rewards, and widening the range of roles that they can perform. Further, the services are better equipped. Indeed, we are planning this year to devote some 45 per cent. of the defence budget to equipment.

The results of our concentration on more and better equipment are plain to see. Let me remind the House that in the last financial year alone we ordered four major and three other warships, 16 naval aircraft, Challenger tanks to equip a sixth regiment, six regiments' worth of Challenger armoured repair and recovery vehicles, 18 battalions of Warrior and Saxon armoured personnel carriers, three regiments of the new multiple-launch rocket system artillery, and 130 RAF trainer aircraft. Among many other items, we brought into service 13 warships, as well as a number of smaller vessels, 21 naval aircraft, a regiment of Challenger tanks, two battalions of Saxon armoured personnel carriers, four batteries of air defence missiles, 48 RAF aircraft and much more, from small arms to Sea Eagle missiles.

Major decisions, which I shall he taking later this year, include the provision of airborne early warning, for which competitors are due to submit firm prices by 7 July, and a decision on the way ahead for our amphibious capability.

By any standards, our achievement over the past seven years has been impressive. The ending of our commitment to real increases in defence spending does not mean that the achievements are over. Our programmes to update and re-equip the armed forces will continue. But we have to be realistic. Real growth at that pace could not have continued for ever. As the statement makes perfectly clear, and as the Select Committee on Defence has noted in its report published last week, we anticipate a slight decline in the defence budget averaging about per cent. a year for three years, excluding the planned reduction in Falklands expenditure. We have enjoyed seven years of growth; we must now capitalise on the gains we have made.

I congratulate my right hon. Friend the Member for Spelthorne (Sir H. Atkins) and his Committee on their report on the White Paper. Considering the speed with which they were obliged to consider the White Paper, take evidence on it, and draft their conclusions, the Committee has come up with a report that is a model of clarity and concision.

714 I should particularly like to thank the Committee for the realistic and balanced way in which it has addressed the question of matching programmes to resources. This is not a new idea, nor is it a technique of despair, only resorted to in a time of crisis. It should be, and is, the normal method of managing a large and complex budget that contains a variety of very different programmes.

This is the sensible and prudent way in which a responsible Government manage their affairs. Of course, from time to time it necessitates the taking of difficult decisions: it always does. We are perfectly prepared to face up to these. However, it would be quite absurd to exaggerate them and draw conclusions of doom and gloom. No such conclusion has any realistic justification.

Those who say that the budget must keep for ever going up and up if we are to have adequate defences are both wrong and unrealistic. Our defence budget is running at a level about 20 per cent. higher in real terms than it was in 1979. That is not all. Within that much larger budget, equipment has risen from 40 per cent. to 45 per cent. We spend a higher proportion of our budget on equipment than anyone else in NATO. Moreover, we are profiting substantially from our sustained drive to improve the output we get from defence spending. The White Paper draws attention to the remarkable increase in competition in the procurement of equipment. Two years ago, about 38 per cent. by value of equipment contracts were placed subject to competitive forces. The figure is now well over 60 per cent. Furthermore, only about 9 per cent. of contracts are now placed on the old cost-plus basis.

We are confident that the result of such greatly increased competition will be substantial reductions in tender prices and much better value for money for the Ministry, and for the taxpayer. As the Select Committee rightly observed, it is, of course, difficult to quantify the precise savings that we make. The reason should be obvious. In most cases it is hard to calculate precisely what has been saved, because nobody knows what we would have had to pay in the absence of competition.

Although I accept that the examples quoted in the White Paper, and in the Select Committee's report, are of necessity illustrative, they vividly show that the policy is biting. Thus, competition for the production of the Warrior armoured personnel carrier saved about £100 million, or 12 per cent. of the previously estimated costs. The introduction of competition for the supply of missile pallets, which we had previously bought noncompetitively, has led to the price being cut by half. We have saved 20 per cent. of the estimated costs of Challenger armoured repair and recovery vehicles; £20 million of the costs of Upholder class submarines—and there are plenty of other examples.

Competition is not the end of our efficiency drive. We are continuing to transfer resources from the tail to the teeth — for example, about two thirds of naval manpower is now in the front line. Naval support staff numbers have been cut by about 6,000; the Army's "lean look" exercise is resulting in, increased efficiency and the RAF's programme of contractorisation is well advanced.

We have reduced the numbers of United Kingdom-based civil servants by 77,000 — about 30 per cent.—since 1979, and further reductions are planned. Ten years ago, there were 79 civil servants to every 100 personnel in the regular forces; five years ago there were 69, and today the figure has come down to 53. These reductions have not come about easily. As well as putting more work out to the 715 private sector, the Department has had to work hard at improving efficiency in working practices and eliminating inessential tasks. I am sure that the whole House will agree that the success of our Civil Service in carrying out its tasks with great efficiency while reducing its numbers by no less than 30 per cent. is by any standard a remarkable achievement. It reflects very great credit on their skill and dedication, and I should like to thank them all, at every level.

Efficiency improvements are continuing to flow in. And they are not simply once-and-for-all measures. Their effects will be permanent, and will serve to benefit the country not just for the lifetime of this Government, but during those of our successors. Other factors are working in our favour. Falklands-related expenditure is continuing to fall; we are currently enjoying the benefit of lower energy prices; and defence is sharing the dividends of the Government's successful counter-inflation policies.

I trust that it will not have escaped the notice of those who like to lambast the Government with the supposed burden of Trident that, notwithstanding misleading newspaper headlines, the cost of that programme has substantially decreased in real terms. All these things are helping. Nevertheless, we are having to manage the change in our budgetary profile from several years of real increases to a few years of slight decline. This year, I have had to look very carefuly at our programme so as to ensure that commitments and resources are properly matched.

§ Mr. Lewis Carter-Jones (Eccles)

Does the right hon. Gentleman's argument apply to helicopters?

§ Mr. Younger

My argument applies to all the activities we undertake, as well as to ships, helicopters, and all other forms of equipment. Decisions on those will be announced when they are taken.

This scrutiny has been hard and realistic. I began it with no pre-conceptions. It is not yet complete—indeed, as I explained earlier, it is a continuous process. As I have assured the House, there is no question of having to withdraw from any of our major commitments or any major part of them. In order to manage the transition from real growth I shall inevitably have to take some difficult decisions.

We are having to take difficult decisions about 'order dates. Since the process of scrutiny is a continuous one, I cannot give the House a catalogue of final decisions, but I can give an indication of some of the decisions that flow from the exercise. In general, in order to minimise the impact on the front line, I have sought economies in the support and works areas, and in minor projects.

However, it has been necessary to go further than that. To take some examples, in the case of the Navy, we will not proceed with plans we had to retrofit new towed array sonars to type 22 frigates, which will continue with existing towed arrays. In the Army, we will not be proceeding with LAW mine, and we are reducing the provision for future mine systems. In the Air Force some adjustments are likely to the time-scale and production quantities for some weapon systems and, for example, the size of the second batch of Harrier GR5s—for which a quantity of long lead items has recently been ordered — is under consideration. A decision will be taken towards the end of the year.

716 The diversion of aircraft and weapons in support of the major sale of aircraft to Saudi Arabia will also have some temporary effect on the RAF programme and, in particular, will lead to a short delay in the build-up of the Tornado GR1 reconnaissance force.

As I have implied, other difficult decisions will be necessary. We will take these as and when we have to but, clearly, I shall have to take the greatest care when deciding on the size and timing of all orders for the foreseeable future. However, there is no question of wholesale deferrals. We shall take decisions, in the normal way, as they come up. For example, we attach great importance to the provision of effective self-defence for individual ships against aircraft and missiles. Our programme for enhancement of this capability has been continuing. Earlier this financial year we placed orders for a further seven Phalanx and Goalkeeper close-in weapons systems. We shall be issuing a preliminary inquiry this week to shipbuilders who wish to be invited to tender to build up to another four fleet minesweepers. Orders are likely to be placed next year. We are about to place a contract for the full-width attack mine fuse, which will dramatically increase the effectiveness of our barrier mines.

§ Sir Antony Buck (Colchester, North)

Everything that my right hon. Friend has just said has been good news—

§ Mr. A. E. P. Duffy (Sheffield, Attercliffe)

What good news?

§ Sir Antony Buck

Yes; I am sure that the hon. Gentleman will agree that what my right hon. Friend said about new equipment was good news, because the hon. Gentleman is devoted to the Navy, just as I am. However, some of us are a little disconcerted about my right hon. Friend's comments on the towed arrays for the type 22. Will my right hon. Friend assure us that the equipment that will be provided for the type 22 will make this rather expensive ship—these days all ships are expensive—fully effective, and that he is not being penny wise, pound foolish?

§ Mr. Younger

I appreciate my hon. and learned Friend's strong interest in this matter. Of course, we would greatly have preferred to have the advanced capability towed array. It is one measure which we have been able to take to save money. There will still be an effective towed array, which has been proved in practice, but we shall have to forgo the improvement for which we had hoped.

§ Sir Patrick Wall (Beverley)

My right hon. Friend has not said anything about the ordering of the type 22 frigates. Unless they are ordered soon, my right hon. Friend will not be able to keep his promise to keep 50 destroyers and frigates at sea.

§ Mr. Younger

I appreciate my hon. Friend's remarks. If he will wait, I shall come to that subject later.

In addition to the formation of a 12th Armoured Regiment in BAOR, which we announced last year, the introduction of the Warrior armoured personnel carrier will permit us further to strengthen the capability of 1(BR) Corps by the re-mechanisation of 6 Brigade starting in 1988.

I appreciate the interest among many hon. Members on both sides of the House in the future frigate ordering programme. The House will be aware that we are currently considering tenders for follow-on type 23 frigates. Progress is being made in the negotiations, and I shall 717 make an announcement as soon as I can, certainly before the recess. I reaffirm also that we shall be maintaining about 50 escorts in the destroyer-frigate fleet. Our shipbuilding programme is the biggest it has been in recent years.

§ Mr. Frank Field (Birkenhead)

I think that there is widespread support on both sides of the House for the idea that work should be provided for Swan Hunter, if that is at all possible. The Government have made a clear statement that the O2 of the type 23 sequence will go to Swan Hunter if its bid is competitive. In answer to parliamentary questions, the Government have said that they will judge that competitiveness on the basis of bids made by other yards for the sequence of boats from the O3 onwards. May we have an assurance that, if the Government have gone back to Swan Hunter's on its original bid for the O2 and invited it to change its final bid, that shipyard will not be allowed to change its bid for the O3 onwards now that final bids are in from the other yards?

§ Mr. Younger

I appreciate the hon. Gentleman's point. He is substantially right in all that he has said, but it is not quite right to say that Swan Hunter has been offered the opportunity to put in the best bid. The company has been offered the order for the type 23 frigate No. O2, provided it can match the price elsewhere. This decision was taken last year as a special gesture to Swan Hunter, which was disadvantaged by a previous decision, of which the hon. Gentleman is well aware. That is the position. At the moment, negotiations are proceeding with Swan Hunter. I hope that it is able to meet the conditions that we have put on the order and feels that it has been fairly treated in this matter.

§ Mr. Frank Field

Does the right hon. Gentleman accept that, by going back to Swan Hunter with information about the bids from the other yards for the 03 onwards, he will in effect have been telling Swan Hunter what the bids were for the other orders? It is therefore important that an undertaking is given that, now that final bids are in for the O3 onwards—not O2— there should be no revisions by any of the shipyards, including Swan Hunter.

§ Mr. Younger

Again I see the hon. Gentleman's point, but it is not quite an open competiton in the sense he has suggested. This is a special offer, if one likes to put it that way, to Swan Hunter for a special reason. It was given a special offer —if it could match the best price, it could have the order. There is no question of Swan Hunter being given any secret information from other yards. It is a question whether it can match that price. That decision may have been right, or it may have been wrong, but it was a clear decision. I hope that the House will appreciate that it was made in the best interests of Swan Hunter, giving it an opportunity to recover from what it regarded as an adverse earlier decision.

§ Mr. James Couchman (Gillingham)

Is my right hon. Friend aware of the concern of the principals of Swan Hunter that, as a follow-on yard, it will be disadvantaged with respect to the flow of information from the lead yard unless his Department takes firm control? The principals are concerned that they will have to pay for the information which would come from the lead yard for follow-on orders.

§ Mr. Younger

My hon. Friend is correct. That is one of the concerns that have been expressed to us. We are negotiating on this matter with the company. Although I shall not say any more about those negotiations, I stress that the system of having a lead yard and different yards which build the follow-on ships and follow-on equipment is well tried. We shall try to ensure that it is fairly and properly applied, just as it usually has been in this case.

§ Sir David Price (Eastleigh)

I should like to represent the interests of another shipyard which is involved in this matter. Does my right hon. Friend realise that he must be even-handed in his dealings with all the yards? We all accept the idea of first of clubs, but from then on my right hon. Friend should not just accept one yard, giving it special treatment compared with the remainder. Many yards in the United Kingdom have the same problems of unemployment, and so on. My right hon. Friend must go a little further in reassuring the House of a "fair do". That is a simple concept.

§ Mr. Younger

I appreciate my hon. Friend's point. I draw a distinction between the special position of Swan Hunter and the type 23 frigate O2. The decision was taken last year because of an earlier decision elsewhere that the company would have a special opportunity to bid for the O2 on certain terms which I have described. As far as the rest of the ordering, except that order, is concerned, I assure my hon. Friend that there will be absolute fairness between the various yards which submit bids. I hope that that reassures my hon. Friend.

§ Mr. Nicholas Brown (Newcastle upon Tyne, East)

Will the right hon. Gentleman give way?

§ Mr. Younger

This must be the last time that I give way.

§ Mr. Brown

It is the last intervention, I assume, from the Labour side of the House. Can the right hon. Gentleman tell us how many frigates he intends to order this year?

§ Mr. Younger

That would be to anticipate the announcement I hope to make before the summer recess. The hon. Gentleman would not expect me to anticipate that announcement today, although he might hope that I shall.

The result of all our efforts will he a realistic programme that will allow us to maintain our present all-round contribution to NATO. The White Paper makes clear the scale and diversity of that contribution. Among our NATO allies, only the United States maintains a greater range of commitments. Furthermore, as the White Paper emphasises, none of our four main NATO commitments can be seen in isolation from one another. All are interrelated. All are irreplaceable. The elimination or serious reduction of any one of them would seriously weaken the Alliance.

We do not take the insular view that our security interests stop at our back door. Not only do we retain formal responsibility for the defence of our dependent territories but we have world-wide political, economic and trade links. We therefore have a legitimate interest in promoting stability throughout the world, and our out-ofarea capabilities and deployments make their own contribution to the security interests of the Alliance.

The House will know that a Royal Navy task group is currently circumnavigating the world and taking part in a series of exercises with our friends and allies. The task 719 group has already visited Venezuela, the United States and Canada and has just completed a successful contribution to exercise RIMPAC in the Pacific. I am also glad to be able to announce today that HMS Illustrious, which was damaged by fire earlier this year, will be rejoining the group later this summer. On the final leg of the deployment, in November and December, the group will be involved in an important exercise in Oman, which will demonstrate our ability to respond rapidly to a crisis anywhere in the world by strategic air deployment.

Our all-round contribution gives this country a strong and influential voice in NATO. It enables us to play a leading part in all matters affecting our national security. It ensures that we have a major say in formulating NATO's policies. The White Paper illustrates this point. It describes the prominent part we are playing in promoting more and better equipment collaboration, both with our European allies and more widely within NATO. We also hold a central position in NATO defence planning, including, particularly, our strong support for efforts to improve the Alliance's conventional defences. As the House will be aware, Britain is the first country outside the United States to have received substantial contracts for research under the strategic defence initiative. Last week contracts were concluded worth over $14 million to British companies and research establishments. I am confident that more are on the way in the near future. This is, I think, a very encouraging start.

It is, after all, only six months since the memorandum of understanding that covers British participation was signed. This is a very short time in the context of the SDI research programme as a whole. There is a very long way to go in SDI research, and there are plenty of opportunities for other British firms, universities and institutions to join in. I hope that they will take advantage of the tremendous possibilities that exist.

I note, with some surprise, that Opposition parties are now committing themselves to oppose those contracts and the high-technology jobs that they will safeguard. I only hope they realise that their policy would result in the research programme for SDI continuing unabated with no participation for British industry, a drain of British skills to the United States, and no British influence at all in the conduct of the SDI research programme. Perhaps with that in mind the House will agree with me that the actions of today's Opposition make the Luddites of old like wizards of high technology by comparison.

The White Paper also reaffirms our belief in, and support for, effective measures of arms control. We have long emphasised that strong defence and realistic arms control go together. We have also set out very clearly what arms control cannot do. It is not an alternative to defence; and it is not a quick and easy route to better East-West relations. However, when both sides are prepared to negotiate seriously with the aim of reaching balanced and verifiable agreements it can achieve very real benefits. This is our aim and the West has on the negotiating table radical and serious proposals for achieving it — 50 per cent. cuts in the superpowers' strategic arsenals; total elimination of the whole class of long-range intermediate nuclear missiles; a global ban on chemical weapons, reduction in conventional forces in Europe, beginning with the crucial central front; and the introduction of a wide 720 range of significant measures to improve confidence and stability in Europe. We hope that the Soviet Union is prepared to take an equally constructive attitude.

In recent weeks the Soviet Union has tabled a range of new proposals at the bilateral US-Soviet talks in Geneva. We would very much welcome it if that was indeed a sign that it was now prepared to take a more constructive approach. President Reagan gave a cautious welcome to the proposals in his Glassboro speech 10 days ago. I know from my discussions last week with the US Administration that they are considering them very carefully. If the Russians are now indeed ready for serious negotiations, they will not find lacking a positive response from the United States.

In the meantime, we support adherence to treaties and agreements that already exist. We applaud President Reagan's decision to dismantle older weapon systems to remain within SALT 2 limits; we urge the Soviet Union to respond constructively, and, as I stressed in the United States last week, we hope that both sides will continue to observe the SALT agreements in the future.

This country is directly involved in talks at the various forums for multilateral arms control at Geneva, in Stockholm, and in Vienna. Perhaps I can highlight just two points. The first concerns chemical weapons. At the Geneva conference on disarmament we are working hard for a verifiable worldwide ban on those dreadful weapons. We abandoned our offensive chemical warfare capability in the late 1950s. The United States has produced none since 1969. The Soviet Union has responded to that example of one-sided disarmament not by reciprocating, but by exploiting its 17-year monopoly to the hilt.

There is an important point here that needs answering. If there were any validity in the unilateralists' theory that one-sided disarmament would produce an equivalent response from the other side, the West's one-sided chemical warfare disarmament would surely have proved it. The Soviet Union has had no need whatever to produce chemical weapons for over 17 years, yet it has carried on regardless. Nothing could prove more clearly that one-sided gestures are futile, and that negotiations will succeed only when backed by strength. Those are the circumstances in which the decision has been taken for the United States to modernise its own chemical weapon stocks if no arms control agreement is reached. Our primary goal must still remain a global ban.

Secondly, the House will have noted that NATO has established a high level task force on conventional arms control to look at ways of strengthening stability and security in Europe through the increased openness and the establishment of a verifiable, comprehensive and stable balance of conventional forces at lower levels.

We welcome Eastern recognition of long-standing Western concerns about conventional disarmament in the Budapest statement of 11 June. While there are a number of questionable elements in it—such as the presumption that parity in conventional forces already exists in the whole of Europe—we shall be considering the Eastern ideas carefully, both nationally and in the high level task force. In the meantime, there is ample opportunity for the Warsaw pact's words to be reflected in a practical and positive way in the negotiations at Vienna and Stockholm.

The Government's approach to arms control, like our approach to the defence of this country's vital interests, is firm, logical, consistent and realistic. Not only the British 721 people, but our allies, have the utmost confidence in our ability and willingness to defend western values and to secure peace with freedom in Europe.

§ Mr. Gavin Strang (Edinburgh, East)

Before the right hon. Gentleman leaves the general area of arms control I should like to ask him about one issue he has not addressed—the British Government's attitude towards a comprehensive test ban in view of the test last week and the continuance of the moratorium. The British Government have always argued that their only objection to a comprehensive test ban is the need for adequate verification and that if that could be achieved they would certainly settle for a comprehensive test ban treaty. In view of the statements in recent months, which suggest that the Government are moving towards the American position —even if they could have adequate verification they still would not want it—could the Secretary of State tell us where he stands? Is it still Government policy to try to have a comprehensive test ban treaty?

§ Mr. Younger

I am glad to respond to that. I can confirm that it is still very much the Government's position to do everything we can to aim for a comprehensive test ban treaty. As long as that fails to be negotiated, tests have to continue in order to maintain the capability and safety factors of present weapons. Our ultimate aim remains unchanged, to have a comprehensive test ban treaty. It is still the case that verification and so on is the most severe obstacle to achieving that. I hope that it can be overcome as quickly as possible.

I referred earlier to defence as the prime responsibility of any Government, and I must return to that point now. It is far from easy for any Government to fulfil this requirement. It is necessary to allocate funds which could so easily be needed in other fields of government to face up to the reality of the various dreadful types of weapons with which we are threatened; it is necessary to choose priorities, which is never easy. But those hard facts have to be faced, and a Government with any claim to be responsible have to face up to them.

It is precisely in this respect that the present stance of all our Opposition parties falls so lamentably short as the amendments tabled to today's motion so amply and frankly demonstrate. It is bad enough that we face a so-called "alliance" which has two defence policies that are in complete conflict with one another. Liberals, on the one hand, wish to ban all nuclear weapons and many support the Campaign for Nuclear Disarmament. The Social Democrats, on the other hand, recognise the danger of that and support a nuclear deterrent, but they do not know what, except that they will cancel the Trident programme. That shambles is only made worse by the current position taken up by their leaders—that as they do not know what to do, they must take more time to think about it. The plain fact is that there is no such time available. The decisions we took to initiate the Trident programme were taken in 1980 to fill a need in the mid-1990s. That is the sort of lead time which one has to face up to for highly complex products. In that matter, the alliance is simply left behind. It is too late to think about that now.

But the Labour party, which has at least taken up a position, has chosen one which would be gravely damaging to Britain and NATO, and, I fear, even more fatal to itself. Abandoning the Polaris fleet which is our ultimate defence now, and the Trident programme which 722 will replace it, is a policy fraught with danger. The Labour party's policy would leave us with no deterrent to an attack by vastly superior conventional and nuclear forces, other than a big build-up of conventional arms, probably requiring conscription, which would not only be far more expensive than Trident but quite inadequate to redress the conventional imbalance that it sought to meet. Labour would add to the abandoning of Polaris and Trident, we understand, the removal of all United States nuclear bases from Britain. The effect of those policies really cannot have been thought through by anyone in the Opposition, and it is high time it was.

I have no doubt that the United States response would be a greater likelihood of reduction of its contribution to the defence of Europe both in men and money. It is the biggest contribution of all. Those reductions would be followed by others, to the great weakening of the NATO forces in the face of an ever-strengthening threat. I accept that that policy may be helpful in patching up the deep divisions in the Labour party, but it simply will not do for a party which, presumably, aspires to become a Government. I just do not believe that the British people, if they were ever faced with such a dangerous and unworkable policy, would contemplate supporting it for one moment.

This is, of course, for the Labour party to decide—not me—but I hope that it will listen with great care to what is said in the debate, because there is still time for Labour Members to think again and draw back from a policy that is likely to be so damaging.

§ Mr. Donald Stewart (Western Isles)

I have listened to the Secretary of State's comprehensive review. I appreciate that it is not entirely within his departmental remit, but the right hon. Gentleman has not referred to the shrinkage of the merchant service in recent years, which is an important part of the defence equation. What do the Government intend to do about that?

§ Mr. Younger

I entirely agree with the right hon. Gentleman that that is a most important point. I can only say that I cannot include every aspect of this large White Paper in one speech, but I can assure him that that matter gives rise to great concern. We are watching carefully the state of the merchant fleet with particular regard to the types of ships that we are likely to need for any future defence purpose. The present situation is that there are sufficient such ships for our needs, except for one or two particular categories. However, we are keeping the matter closely under review. I hope that the right hon. Gentleman will accept that.

As I have said, defence is the most important long-term issue that any Government face.

§ Mr. Paddy Ashdown (Yeovil)

The right hon. Gentleman appears to be moving towards his conclusion. I wanted to intervene because he roundly attacked the inconsistencies, as he sees it, of the Opposition parties. He claimed for the Government stability, consistency and genuine continuity of policy stretching over the years.

Earlier the right hon. Gentleman carefully explained to the House that he was cutting overall defence expenditure by one and a half percentage points, and perhaps five or six percentage points over the next five years. I should like to draw his attention to the answer given by his 723 predecessor to last year's Select Committee on Defence, when it was put to him that that might happen. His predecessor said: I would think that is an unthinkable denial of resources in the defence budget. There are no plans or any discussions or even information that such a thing could come about. In the light of the fact that the right hon. Gentleman has announced that such a thing has just come about, how on earth does he square that statement with his predecessor's clear answer, taken on the basis that it could not be, as we must say in the House, a deliberate deceit?

§ Mr. Younger

I suggest to the hon. Gentleman that one thing he would be well advised not to try to do would be to reopen the subject of the divisions in the alliance on defence. That would be much better swept under the carpet, if the hon. Gentleman could find a carpet big enough.

With regard to the hon. Gentleman's precise point, there is nothing new in any of this. It was clear as from last year what the trend of expenditure would be in the defence budget. What I had to do, which my predecessor did not have to do because it was not yet in the time scale for him to do it, was deal with this year's review of the budgeting expenditure and bring it into line with the expenditure in the White Paper. There is nothing new about that. It is well known. The Select Committee has given an extensive description of it.

The hon. Gentleman's energies would, on reflection, be better directed to going back to his colleagues in the Social Democratic party and trying to get some agreement out of them about a joint policy for the alliance, because two parties that have two different defence policies may be giving choice, but it is a choice that the British people will find confusing.

As I have said, defence is the most important long-term issue that any Government face. It is not a subject for flippant sloganising, and it is not susceptible to glib solutions. Security can be achieved only by sustained efforts to provide the forces that are necessary. The Government are facing up to their responsibilities seriously and realistically, as the White Paper makes clear. Defence is one area of policy where there should be no changes of direction from year to year. There are no quick fixes in this White Paper. Instead, there is a clear message— continuity, consolidation and realism; and sustained effort in support of NATO and in defence of our peace and freedom.

Today we have before us two amendments tabled by two of the Opposition parties—or perhaps I should say three. They are revealing amendments because they attempt to lay before us the truly devastating and damaging alternatives, or non-alternatives, with which the country is faced. In view of those amendments, which I hope will be closely scrutinised in the debate, I ask the House to approve the motion on the Defence White Paper.

§ Mr. Denzil Davies (Llanelli)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: believes that the plans outlined in the Statement on the Defence Estimates 1986, Cmnd. 9673, and in particular the Government's plans to buy the Trident nuclear system, are leading to damaging cuts in Britain's conventional defence capabilities at home and abroad and in Britain's defence 724 industrial base; calls upon the Government to cancel Trident and to use the money saved for more practical non-nuclear defence purposes; declares that the security and the defence of the United Kingdom will be best served in future by maintaining strong conventional defences within the North Atlantic Treaty Organisation and not by acquiring a new generation of nuclear weaponry of any kind; and calls upon the Government to take an active part in securing the removal of all nuclear weapons from the United Kingdom and the reduction and abolition of all nuclear weapons, and also to make plain its opposition to the production and deployment of chemical weapons by the Union of Soviet Socialist Republics, the United States of America and any other nations". The Secretary of State has tried to paint a reasonably rosy picture of defence expenditure, but, as he knows—he has not tried to conceal it—it is clear that from now on expenditure for Britain's defences will fall. The figures were in the public expenditure White Paper and, of course, they are in the "Statement on the Defence Estimates 1986", which we are now debating.

The calculation of the percentage amount of that fall, as often, depends on what assumptions are made, but they range from about 4.5 per cent. at one end to close on 7 per cent. at the other. Outside commentators and, I am told, perhaps even some internal Treasury sources have estimated that the fall, cut or reduction could be close on £1 billion a year. When that point was put to the Secretary of State in the Select Committee on Defence, he seemed surprised. However, the accuracy of the figure has never been convincingly challenged. Perhaps it will be challenged later in the debate but it has never been refuted.

As with all Governments, this Government's figures are based upon a number of optimistic assumptions and on wishful thinking. They are based on assumptions about inflation and the exchange rates. The inflation figures—and the Select Committee stressed the importance of these figures—may look reasonable at the moment. However, with the Chancellor running the money printing presses on a three-shift basis, and with wages in the private and public sectors increasing by twice or three times the retail price index, the short-term future for inflation does not look too good. With the balance of payments deteriorating, the value of the pound in the international exchanges can only decline. It will certainly not go up. As the Secretary of State knows, a rise in inflation and a fall in the exchange rates would make his problem worse.

A number of major commitments have not yet been costed. The cost of completing the Nimrod project, whether or not it is completed by GEC — and the Opposition hope and believe that GEC will be able to complete it successfully—has not been calculated. If it is not completed by GEC, there will be the cost of purchasing a new system from the United States.

The cost of replacing the Royal Navy's amphibious vessels has yet to be calculated. The Opposition believe that these vessels must be replaced.

Some of us were rather surprised to read the evidence given to the Select Committee by the Secretary of State regarding the European fighter aircraft. Apparently that aircraft has not been costed. The Secretary of State is hoping that the expenditure will not fall into the budget until well into the 1990s when no doubt he will not be Secretary of State for Defence. Even more surprising, it appears that all that we are committed to—and perhaps Conservative Members knew this—is a feasibility study. My hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) will deal with that point in detail 725 tomorrow. However, the thousands of workers in the aerospace industry need to be told what the commitments are and we need assurances about the building of the European fighter aircraft.

On other occasions the Secretary of State has told us that there will not be a fundamental defence review. We have been told that there will be stringent financial reviews, hard choices and difficult decisions. As we know, that is the language of cuts. However, we have been told that there will be no review.

I believe the Secretary of State. He would not dare, as he knows, for political reasons, have a fundamental defence review. We believe that if the Conservative party were to win the next general election a defence review would result. In the meantime, the Secretary of State, like the good soldier that he is, will soldier on. There will be selective cuts, and we have heard about some of them today. There will he programme delays and there will be what is known in the trade as salami slicing.

It was reported recently in Jane's Defence Weekly—and we have heard a list of cuts today—that 40 projects are under consideration for cuts or delays. The cuts will fall mainly on the budget for equipment. We believe and fear that the prime target again will be the ships of the Royal Navy. It is rumoured that the ghost of Sir John Nott is again beginning to stalk the corridors of the Ministry of Defence, striking terror above and below decks. The Government maintain — and we heard it again today from the Secretary of State—that they are committed to a Navy of 50 destroyers and frigates. The Under-Secretary of State has also made that claim, but we have noticed that he makes it these days with little relish or enthusiasm.

As the Select Committee made clear, there is no point in having 50 frigates and destroyers if most of them are in a naval museum or if they are unable to venture out much further than the Isle of Wight. To maintain a modern 50-warship Navy, the Government must order at least three type 23 frigates a year. We got one in 1984. We did not get any in 1985, and we still have not had one in 1986, although great announcements are presaged for the end of this Session.

Unless the Government speed up their ordering quite drastically, our sailors will have to go to sea in the 1990s with the technology of the 1950s and 1960s. The costs of maintaining an aging Navy will of course be an additional burden on the defence budget, and the prospects for our warship building yards, especially on the Tyne and on the Clyde, will be grim.

Under this Government we have already seen the virtual demise of Britain as a builder of merchant ships. Our Merchant Navy is declining rapidly and, unless orders start coming quickly, we will soon become a naval nation with little or no capacity to build our own warships.

The real problem, which was hardly mentioned by the Secretary of State, is Trident. Over the next few years, the cost of Trident will increase rapidly and dramatically. At the same time, the total spent on defence will not only remain static but will actually fall. Within a falling defence budget, there will be an escalation in cost of one item which is completely sacrosanct and which will not be cut by the Government in any way.

Yes, of course the Government can afford Trident, but the price will be paid by the ships of the Royal Navy, by the aircraft of the Royal Air Force or by the tanks in the British Army, or through a combination of all three. Our conventional contribution to NATO and our front-line 726 capability will be reduced and weakened at a time when the urgent necessity in Europe, especially after the lessons of the nuclear explosion in the Ukraine, is to raise the nuclear threshold. Some of the battlefield nuclear weapons in central Europe are a thousand times more powrful than the explosion in the nuclear power station at Chernobyl. If one or two of those battlefield nuclear weapons were used, friend and foe would be destroyed, and not just on the battlefield. The urgent necessity is to build our conventional strength and raise the nuclear threshold. The Government are reducing our conventional strength and thereby lowering the nuclear threshold in NATO and in Europe.

Cutting the non-nuclear equipment budget—which is where we believe the money for Trident will be found.—would also put thousands of jobs in the defence industries seriously at risk, because 95 per cent. of those jobs are engaged in producing non-nuclear equipment. The damage is compounded because almost £5 billion of the contribution and the cost of Trident will not be spent in Britain. It will be spent in the defence industries of the United States. A type 23 frigate costs £110 million or £120 million, yet the shipyards and the warship yards on the Clyde and on the Tyne have to scramble for the few orders available. However, the Government are prepared to pour £5 billion into the defence factories in California and Texas which have done so well out of President Reagan's defence-led and deficit-financed economic boom.

§ The Parliamentary Under-Secretary of State for Defence Procurement (Mr. John Lee)

Will the right hon. Gentleman give employees in our naval warship yards an assurance that their jobs would be safeguarded under a naval programme initiated by an incoming Labour Administration? Will he give the same guarantee that he gave to workers at Vickers in Barrow?

§ Mr. Davies

Indeed. We have made it absolutely clear that, because we will switch the money spent on Trident to conventional—

§ Mr. Michael Mates (Hampshire, East)

All of it?

§ Mr. Davies

Yes, all of it. Perhaps the hon. Gentleman should read the Opposition amendment.

§ Mr. Mates

No cuts?

§ Mr. Davies

I can give the Minister the assurance that he sought.

§ Mr. Lee

May I have it absolutely clear? All jobs in naval shipyards will be guaranteed by an incoming Labour Government through a naval building programme: is that what the right hon. Gentleman is saying?

§ Mr. Davies

The jobs will be preserved because we will be able to preserve the naval ordering programme and the present Government will not. I shall read our amendment out if the hon. Member for Hampshire, East (Mr Mates) wants me to.

§ Mr. Mates

Yes, read it out.

§ Mr. Davies

We believe that the money saved by cancelling Trident should be used for non-nuclear defence. It should be used to makntain and preserve existing commitments. We do not believe that the Government can preserve existing commitments— a 50-warship Navy, a European fighter aircraft and the rest. It should be used 727 also to strengthen our conventional defences in NATO, to raise the nuclear threshold and, we hope, to prevent a nuclear war, or a war in Europe becoming a nuclear one.

§ Mr. Couchman

The right hon. Gentleman has just given some commitments to my hon. Friend the Parliamentary Under-Secretary of State and he made some statements regarding the extent to which Labour would transfer from Trident to conventional forces. How, therefore, does he explain that, on a platform which I recently shared with the hon. Member for Oldham, West (Mr. Meacher), when the hon. Gentleman was challenged on how he would find money for his aspirations for the National Health Service, he said, "We will stop Trident"?

§ Mr. Davies

I will have to study what my hon. Friend said. I have just made the point clearly in the House of Commons, which is the right place in which to say such things.

§ Mr. Couchman

rose—

§ Mr. Davies

No. This is a two-day debate. I have given way enough and the hon. Gentleman will have plenty of opportunity to make his speech. I have made the commitment absolutely clearly where it should be made —here in the House.

We believe that the case against acquiring Trident or any other nuclear system for Britain does not rest only on financial and economic grounds. The issue is not just about modernisation, a word conveniently chosen by the Government to preserve what was again today described as continuity so that there is no debate about this fundamental issue.

The issue at the moment is whether it makes economic, military and political sense for Britain, bearing in mind all of the changes that have occurred in society, our place in the world and in the world itself since the end of the last world war, to acquire what I would describe as third generation nuclear weapons. The House knows that Mr. Attlee and Mr. Bevin acquired the first. I understand from my reading of the history books that there was not much debate about that then. Mr. Macmillan acquired the second generation; and ultimately—there is still time—the country will have to decide whether to go down that road for the third time.

It is absurd to pretend that this is a simple issue. There are financial and economic factors, and the effect on Our non-nuclear defence exenditure must be considered. We have also to consider the morality, or otherwise, of nuclear weapons and the military credibility of a British nuclear system in a world of massive superpower nuclear superiority. There are also the political consequences for Britain of whatever decision is taken to be considered.

Perhaps because the issue is so complex and can never be entirely resolved by applying objective criteria, most debates in the House and outside tend, unfortunately, to become slanging matches. Those who are against the bomb are accused of being unpatriotic, and those in favour of it are sometimes accused of being the perpetrators or seekers after nuclear holocaust. It is obvious that neither picture is true of the overwhelming majority of hon. Members and people outside.

We agree with the Government at least in one respect. It is no good pretending that this decision can be put off 728 much longer. It is no good hoping that the political dilemma can be avoided by waiting almost until the Polaris hulls are full of holes and the noise of their engines can be heard in the Kremlin. Nor is there any escape, as some seem to think, in the arms talks. We all hope that the talks will be successful, whatever that really means. Mr. Karpov and Mr. Kemplemann at Geneva might eventually be able to agree deep cuts in the strategic nuclear arsenals of Russia and America. They may agree to cuts of 50 per cent. I hope that they do. As the Secretary of State said, some optimistic noises are coming from Geneva, Washington and Moscow.

Even if Russia and America agreed deep cuts, they would still have massive nuclear capabilities and all of the questions about a British nuclear system would remain. Questions about morality, costs, and the effect on our conventional weaponry and the military capability of a British nuclear system would remain. There is no escape from making a decision. It is no good hoping that the Geneva talks will enable hon. Members to postpone a choice.

The Opposition's stance is clear. We do not believe that it makes sense, militarily or otherwise, for Britain to go nuclear a third time. I have mentioned the economic and financial case and the effects on our conventional defences, but there is a moral case. Many people might be surprised to discover that they agree even with President Reagan that nuclear weapons are immoral. There are many who travel the extra mile with the American Catholic bishops and conclude, as they did, that if nuclear weapons are immoral a defence policy based on them is also immoral. There are many people who share the late President Kennedy's abhorrence for what he called "a strategy of annihilation".

The military arguments that have been trotted out in respect of the British nuclear deterrent have not been wholly convincing. All of the best casuists and sophists at the Foreign Office and at the Ministry of Defence have hot been able to make a cast iron case.

§ Mr. James Wallace (Orkney and Shetland)

The right hon. Gentleman and the Labour amendment make it clear that the Labour party does not believe in going on to the next generation of British nuclear weaponry. Will he make it clear whether, if Labour took office, it would decommission Polaris immediately?

§ Mr. Davies

I shall come to that.

The case for Trident has not been made strongly. We have had several facile phrases. We have been told about the second centre of decision-making. We have a seamless web. We have the weapon of last resort. That is a chilling phrase which conjures up a romantic but gruesome image of Britannia and her trident with her back to the sea and with Europe apparently in ruins and America either defeated or sulking in her tent. Then there was, and no doubt still is, the "peace in Europe for 40 years" brigade. That slogan was much favoured by the Secretary of State's predecessor, the right hon. Member for Henley (Mr. Heseltine). It had the slightly veiled hint that in reality it was the British bomb that had contained the hordes from the East. It ignored the effect on Europe of the post-war settlement and the fact that there had been other periods in European history when there had been peace for 40 years without nuclear weapons.

I suspect that, paradoxically, the British bomb was not contrived or conceived as a military weapon, and that that 729 is why it has been so difficult to find a military rationale for its existence. I believe that it was born out of the great conferences at the end of the second world war. It could be said to be a Yalta or Potsdam bomb, a "seat at the top table" bomb—these days we hear little about the top table—or, dare I say it, a "not naked in the conference chamber" bomb. Sadly for some and happily for others there has been no British presence at the superpower talks. The Secretary of State tried to trot out the conferences where Britain is still present, but there has been no British presence at talks about nuclear weapons since 1963. The players are now Mr. Karpov and Mr. Kemplemann. We believe that it would be foolish nonsense to conjure up images of past glories by spending £10 billion or perhaps more on a weapon which we cannot afford and which we would not dare use.

It is no secret that some hon. Members are opposed to Trident, yet believe that Britain can and should remain a nuclear weapon state. It is not the view of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel). In an interview published in Jane's Defence Weekly on 15 March the right hon. Gentleman said: As far as we can tell you, there is no case for renewing the independent nuclear deterrent … We don't see any case for the British independent deterrent and that's a view the Liberal Party has consistently taken since the late 1950s. He continued—I do not understand this— we prefer to be simply the servicing and the facility arrangement for the American nuclear deterrent. It is no secret that some people believe that it is possible to cancel Trident and still acquire some sort of British nuclear weapon. They are indulging in escapism and fantasy. As Mr. William Rodgers, a vice-president of the SDP, pointed out in The Times of Thursday 12 June, such a view is a "fudge". He said: The real fudge is to say unequivocally that Trident should be cancelled but that Britain should remain a nuclear weapons state. The lacuna is obvious: how? The idea of submarine-launched cruise missiles has its supporters. But it was rejected by Labour ministers in 1978 and then by a Conservative Government. Most defence experts are sceptical. If Trident is cancelled in two years' time, some £2.5 billion to £3 billion will have been spent … It is far from clear that the remaining sum would enable additional submarines to be built, new British warheads for cruise missiles to be developed and new missiles acquired, perhaps with French participation, all at significantly less than the cost of Trident. The right hon. Member for Plymouth, Devonport (Dr. Owen) may not agree with Mr. Rodgers. I have always listened with great interest to the right hon. Gentleman's speeches on defence and disarmament. He takes a great interest in the subject. However, I am afraid that on this matter the right hon. Gentleman is all at sea. He scatters words, ideas, and, metaphorically speaking, various nuclear systems around the Chamber like confetti, but we get little hard, practical analysis. We get many prescriptions, but there is no cure in sight.

Last year we started with the French M7 missile, then we had a various assortment of cruise missiles, American missiles on ships, submarines, land and air planes, and then Anglo-French missiles on ships, submarines, land and air planes. Now the ideas have become even grander and more dangerous. Recently in Bonn the right hon. Gentleman was quoted as saying that we needed a European bomb — a European deterrent — which is, interestingly, mentioned in the amendment on the Order Paper in the names of the leaders of the Liberal party and 730 the SDP. They call for a European bomb and a sort of European nuclear club. It seems that the right hon. Member for Devonport has won after all.

Who will prepare and bring in this European bomb? I suppose that Britain would contribute, but I do not know about the French. Perhaps they will play and perhaps they will not. They are not a member of the military structure of NATO. Will the Danes contribute to this European bomb? Will the Dutch, the Belgians and the Norwegians take part? Will they be consulted for their views?

The most substantial question is whether the Federal Republic of Germany will take part. I should have thought that it was impossible to have a European deterrent without some sort of participation—perhaps perhaps it can be hedged around — by the most powerful economic and industrial country in Western Europe whose territory would be in the front line. Whichever countries participated, it would be impossible to have a European bomb without German participation. One could say that at least Franz Josef Strauss and his friends would be queuing up rapidly to sign and join.

The repercussions of a European bomb, which must be considered as they have been tabled in an amendment, are enormous for the stability of West Germany, for other European nations of NATO, for relationships between Western Europe and the Soviet Union, and for arms control implications of the non-proliferation treaty, the comprehensive nuclear test ban agreement and all the other agreements which have been negotiated since the war. That is too high and too dangerous a price to pay to exorcise the angst of the leader of the SDP.

We believe in, and we have tried to put forward, a comprehensive, clear defence policy, although the Secretary of State does not like it. It is that we should make a substantial conventional contribution to NATO and that we should spend the money that would otherwise be wasted on Trident on our conventional defences.

§ Dr. David Owen (Plymouth, Devonport)

The right hon. Gentleman has not yet explained to the House how he justifies throwing the United States out of its nuclear bases here. How can he rely on a presence in NATO when NATO strategy is firmly based on conventional and nuclear deterrence? Has he seen what has happened to the ANZUS treaty which, in the past few days, has been effectively set aside because the United States was not prepared to be a member of a treaty organisation when one member of it had said that ships carrying nuclear weapons could not go through its ports?

§ Mr. Davies

I know two things. First, a Labour Government will contribute, as this Government are contributing, 95 per cent. of Britain's defence budget to NATO. That is a substantial commitment, and greater than that of the United States. That contribution will be valued by our NATO partners, and will maintain the influence within the Alliance that we have now.

Secondly, I noticed in the alliance amendment a reference to bases. I suggest that the time has come when the right hon. Member for Devonport should make his own, constructive defence policy and not try to escape by attacking the Labour party's defence policy.

I have made it clear that our policy means that there will be a strong conventional contribution to NATO. That policy is morally right for Britain and it makes military sense. We shall put that policy honestly and clearly to the electorate, and I believe that it will accept it.

§ Sir Humphrey Atkins (Spelthorne)

Before I come to my comments on the speech made by my right hon. Friend the Secretary of State for Defence, I shall spend some time dealing with the speech made by the right hon. Member for Llanelli (Mr. Davies), speaking on behalf of the Labour party. Several points arise from his speech that I wish to explore. He has made it clear that it is Labour party policy to abandon the nuclear deterrent. I accept that this is the most fearful weapon that mankind has invented and I have no doubt that both he and I would be much happier if it had never been invented.

However, does the right hon. Gentleman believe that the Soviet Union does not look at it in that way? Does he think that the possession by the West of nuclear weapons does not give the Soviet Union pause for thought? If he believes that the Soviet Union would hesitate to attack an enemy when it knew that it would be retaliated in that way he is admitting that nuclear weapons are a deterrent.

As I understood him, and no doubt he will correct me if I am wrong, the right hon. Gentleman is saying that nuclear weapons are a deterrent to the Soviet Union but that we should not have them. In effect, he is saying that the West must rely on the United States or France for its deterrence. I find it difficult to understand how he and some of his colleagues can, at one and the same time, be offensive about the United States and say that we shall rely on that country for the deterrent. Perhaps the right hon. Gentleman would prefer that we rely on the French. Does he seriously believe that by deliberately weakening ourselves we should be safer? I cannot follow the logic of that argument.

The right hon. Gentleman was clear about what he would do with the money saved if we stopped all nuclear weapon programmes. I was delighted, because he was not so clear only six short months ago when he said that the Labour party would maintain conventional defence spending at present levels."—[Official Report, 30 January 1986; Vol. 90, c. 1126.] Presumably he has changed his mind since then, as he said that he wants to increase expenditure on conventional defence. However, I must draw his attention to the fact that that is not what his noble Friend Lord Graham of Edmonton said in the other place last week. He was speaking on behalf of the Labour party, so I am not allowed to quote his words. However, he made it clear that, in the view of the Labour party in the other place, we were spending too much on defence. If the right hon. Gentleman does not believe me, I suggest that he consults the Lords Hansard for 25 June 1986, column 363. Perhaps the right hon. Gentleman is disowning the Labour party Front Bench in the other place. It is difficult to understand precisely where it stands.

If the right hon. Gentleman's latest remarks, contradicting what he said in January, are now the position of the Labour party, I wonder whether to do what he suggests would increase the level of deterrence. He says that if we save money on the nuclear deterrent, we could spend it all on something else. Last week, in the other place, a Government statement was made by my noble Friend Lord Glenarthur, which I am allowed to quote. He spoke of the alternatives that one could buy for the money that we spend on Trident over its life. He said: This will be the equivalent of about three armoured divisions on the central front or, in terms of the equivalent 732 annual expenditure, half the amount we spend on service training, a third of the amount that we spend on BAOR, and a mere one-sixth of the amount that we spend on service pay and allowances". — [Official Report, House of Lords, 25 June 1986; Vol. 477, c. 370.] My noble Friend asked the Opposition in the other place, and I now ask the right hon. Gentleman, whether he seriously thinks that, if he were sitting in the Kremlin, he would be more deterred by this country's possession of Trident or by our possession of three armoured divisions on the central front. I hope that this question will be answered by the end of the debate. I cannot say that three armoured divisions, however good they are—they would be very good if they were ours—would be a deterrent equal to Trident. The right hon. Gentleman has proposed that all nuclear weapons should be removed from the United Kingdom and that the ships that carry them should not be allowed to enter our ports. What effect does he think that that would have on the United States?

I had the pleasure and privilege of attending a conference in the United States three weeks ago and the hon. Member for Sheffield, Attercliffe (Mr. Duffy) was there with me. It was clear from what was said by eminent United States speakers, not service people but people from universities, that the attitude of the United States is not anything like as good we would like it to be. We were told from the platform that the United States, which, as we all know, contributes nearly three times as much to defence as all the European countries put together, is getting fed up with constantly being told by Europe that everything that it does is wrong.

We were told by one professor that a survey showed that attitudes in the United States were changing and that there was definitely a mood that Europe was a thoroughly tiresome place a long way away that cost America a great deal of time and effort. There was a question mark over whether it was really worth saving— [Laughter.] The hon. Member for Liverpool, West Derby (Mr. Wareing) can laugh. We and the hon. Member for Attercliffe, if he was there at the time, were told that not once but twice from the platform during the conference organised by the Supreme Allied Commander-in-Chief Atlantic. There is no doubt that Americans increasingly question, as the older ones among them die off, the need for them to be in Europe.

Another fact that I learnt when I was in the United States is that, increasingly, the people of the United States are turning away from the Atlantic. That is because, as I was told, for the first time more than 50 per cent. of the population live west of the Mississippi. When they look to the sea, they do not look this way; they look the other way. If Britain took a step such as has been described by the right hon. Member for Llanelli, the effect in the United States would be shattering. If the policy enunciated by the right hon. Gentleman were put into effect, the United States would before long withdraw from NATO. When the right hon. Gentleman propounds that policy, he should address himself to that difficulty.

I shall talk briefly about the report of the Select Committee on Defence, of which I have the honour to be Chairman, which was mentioned in kind terms by my right hon. Friend the Secretary of State. I shall make three comments on the many matters which the Select Committee on Defence sought to cover in the report now before the House.

733 My first point is how much I and all my colleagues welcome the attitude of my right hon. Friend the Secretary of State to the Committee and its activities. He has held office for only a few months, hut he has been extremely candid with the Committee. We all recognise his determination to get to grips with the many proplems that face him. We mentioned many of those problems in our third report of last Session, including the consequences of the ending of the Government's commitment to increase defence expenditure by 3 per cent. per annum. Those problems have not gone away. The Minister knows that. He made it clear to the Committee that he knew and, furthermore, that he would grip the problems.

One example of the Minister's determination is the Nimrod airborne early warning adventure, started in 1977 by the Labour party, which has gone so unhappily wrong for so many years. My right hon. Friend made it clear that if the British system cannot be made to work in six months with a limited expenditure of money, he will have to look elsewhere. I agree with that. He must. Everyone hopes that he will not have to, because we would infinitely prefer a system manufactured by Marconi or another company which could be put in our aeroplanes and would work. The present system does not work. The Minister is right to put a time limit on the system because, as it stands, and as the Select Committee has been told by the Supreme Allied Commander-in-Chief Europe, it is a hole in the defences of NATO.

That is a decision that the Minister will have to take. As he has frankly admitted to us, he must take many others. I shall not discuss them all because they are in the report, but I speak for the entire Committee and, I am sure, for the entire House when I say how glad we are to have a Secretary of State who is determined to get to grips with the problems and settle them in the best way he can and as quickly as he can in the interests of Britain's defence.

Secondly, I mention the Merchant Navy, as I did in the debate last year, and, as the Select Committee's report did last year and this year. I make no apology for that. Although it may not officially be recognised as a defence asset, we all know that it is. I congratulate the Minister on having produced a table of figures in the White Paper and on addressing the problem in concert with his friends in other Government Departments. It is as well that he does that. Last year, I drew the attention of the House to the fact that the size of the Merchant Navy under the British flag was diminishing and said that the General Council of British Shipping had forecast by how much it would diminish in the ensuring year. That has happened almost exactly as forecast. It is more urgent now than it was a year ago that the Government should address their mind to what to do about it.

We all want a formal statement of Government policy, for which the Select Committee on Defence called last year, covering the areas of vital importance: the numbers of ships, the availability of ships, the legal powers over the ships and a range of similar matters. Every year, as the number of ships under the British flag diminishes, the more urgent it becomes for the Government to come to grips with the problem and consider what they can do to stop the decline, because, as the Government and everyone else knows, the vast bulk of our supplies, civil and military, still travel by sea and will for many years.

My final point about the Select Committee's report is that I am glad that my right hon. Friend directs his 734 attention to service men's allowances. Ultimately everything that hon. Members and the Government do to defend Britain depends on the man in the field. If he is not treated well he will not perform well. As I am sure the Minister knows, there is a feeling throughout the forces that their employers, the Government, with our support, are not treating them in the matter of allowances as well as they should. I cannot say whether that feeling is totally justified. In some cases, it may be justified, but in other cases it may not. But it is essential that the Government should address themselves to the entire range of allowances to our service men.

The Government should address the matter quickly and produce an answer that is seen to be fair. As I have said before, the defence of Britain rests on the individual to whom one of the greatest British soldiers once put a name—it is the same surname as mine— in a general order. That soldier is the man upon whom our safety depends. If he—in the words of that famous soldier—when ordered will stand to his front and face the enemy, we shall be safe. He will do so if he is properly treated and properly led. None of us has much doubt that he is properly led. It is our business to see that he is properly treated. If he is not properly treated and, when the call comes, does not stand to the front and face the enemy, we shall have no one to blame but ourselves.

§ Dr. David Owen (Plymouth, Devonport)

The amendment tabled—but not accepted— by myself and my right hon. Friend the leader of the Liberal party draws attention to the underlying and fundamental anxiety on both sides of the House: that during the next three years there will be a reduction in real terms in defence spending of more than 4.5 per cent.

The Secretary of State's interesting speech sought to pray in aid the consistency within the Conservative party on defence. He should recall that we were given a solemn undertaking last autumn that defence spending would continue on the basis of level funding for the next few years. He does not do his case a service if he tries to deny that he must now grapple with the problems of a declining defence budget.

I do not deny that with cost efficiencies better value for money could be obtained, but we should not exaggerate the extent to which the Ministry of Defence can continue to make cost-efficient savings without serious cuts in its front-line effectiveness. This is a Ministry which, under successive Governments for more than 20 years, has looked for cost savings more zealously than almost any other Department. Although there was a good deal of fat on the system, we would be foolish to try to deny that it has now been cut to the bone.

On forward budgeting, it will be extremely difficult to find the resources for the new fighter aircraft replacement. It was right for us to go ahead with replacing the fighter aircraft. It was extremely important on European grounds. It was one of the first recent decisions which demonstrated that the Federal Republic of Germany was prepared, on defence matters, to seek a solution which would he in the overall interests of NATO, and not be persuaded by the French to stick solely with German-French collaboration. The decision augurs well for our fundamental defence need in the next few years, which is that Britain, France and Germany should work more closely together than hitherto to strengthen the European defence pillar.

735 On a recent visit to Germany I visited the RAF and a Tornado squadron. I have never been to any part of the armed services where a single weapons system has been so enthusiatically received by everyone. It was praised at every level. There is no doubt that Britain has a fine aircraft, which is an extremely good example of European co-operation. I shall say more later about the future of European co-operation. Although we all agree that formidable obstacles lie ahead for European procurement, the Tornado aircraft is a fine example of what can be done.

We still await a decision about our amphibious forces. It appears as though the Minister believes that much can be done by using the hulls of Fearless and Intrepid. I have some sympathy for him searching for economies, in view of the strains which will be placed on all conventional forces.

Those ships were built in the days when ships were built to last. Perhaps we can extend their lives by an extensive refit. But many people, not just on both sides of the House but in the country, will not be happy to allow the Minister to give up the amphibious capability on the northern and southern flanks. It may mean some make and mend, but the Royal Marines have a special place in the affections of the British people and a proven record which we shall not allow to be sunk on the rock of inter-service rivalry.

The Secretary of State may have to come to the House and say that it will be impossible to build a 50-frigate Navy. In another place, a former Chief of the Defence Staff and Chief of Naval Staff said that the present build rate would not provide a 50-frigate Navy. I agree that it will not, however much sleight of hand is used. What worries me even more is that we are not maintaining the build rate for the hunter-killer submarine force. Those ships are the real new capital ships of the Royal Navy, and they are fundamental to our specialised naval contribution to NATO. Few other navies can contribute in this area, and it would be a great shame if Britain cut back its hunter-killer submarine fleet. It is important to the European balance in NATO that Britain should maintain those forces.

There is justified anxiety about the strain on the conventional budget. However, it is good to see that reductions have been made in the Falklands garrison. It must also be said that it is in Britain's defence interest to undertake negotiations with Argentina and lower the tension so that we can reduce the forces even further and reach, at least during the next few years, a modus vivendi.

When there is a new Government, serious negotiations should take place on the long-term future of the Falkland islanders to obtain peace in the south Atlantic. We cannot continue to pay the heavy costs, of garrisoning the Falklands in perpetuity. None of us in the House would wish that commitment on our successors.

§ Mr. David Crouch (Canterbury)

I was in the Falkland islands last week. The right hon. Gentleman's point is very pertinent. It took a little time to persuade the Falkland islanders, their committees and councillors of this point, but they are beginning to appreciate that a reduction in the threat from the other side would mean less criticism levelled at them of the cost of defending the Falklands.

§ Dr. Owen

I have always believed that the Falkland islanders can be persuaded, if we show leadership, that their best interests can, in the long term, be secured by 736 peaceful relations between Argentina and Britain. It will not be easy in the aftermath of the war. The Prime Minister seems to believe that there cannot be negotiations or discussions on sovereignty because of the loss of life and injuries sustained in the war. She underestimates the armed services and the people who went to the south Atlantic. They went there to resist aggression. In making their sacrifices, they did not believe that, in a reasonable time scale, there could not be discussions, dialogue and eventually a peace settlement between Britain and Argentina. Armed force is used to make way for peace.

§ Mr. Nicholas Baker (Dorset, North)

Does the right hon. Gentleman believe that we could have serious discussions with Argentina without saying that we shall give away the islands' sovereignty?

§ Dr. Owen

I believe that one of the prices of war may be that the direct transfer of sovereignty to Argentina is no longer negotiable. The solution will come through shared sovereignty, or an allocation of sovereignty to some international body, such as the United Nations, so that sovereignty is held by neither Britain nor Argentina. Because of possible military challenges, there would have to be substantial safeguards if sovereignty was passed to the United Nations. However, there are safeguards that could be used and this could be a more fruitful approach.

In view of the contributions made by the Secretary of State and by t