asked the Financial Secretary to the War Office whether he is aware that the Navy, Army, and Air Force institutes import all their stores into Iraq free of duty, and sell them to the troops in competition with British firms which have to pay import duty; if so, whether he will state on what grounds this preferential subsidy is given to the Navy, Army, and Air Force institutes; and whether it is intended to give a similar preferential subsidy to the Navy, Army, and Air Force institutes in England?

As the Noble Lord is aware, the Navy, Army and Air Force institutes provide the troops in Iraq and elsewhere with the institute amenities which are essential to their well-being. To enable the same amenities to be provided throughout Iraq as are provided at home and in other theatres, Navy, Army and Air Force institute stores are admitted free of duty on the condition that sales in institutes are restricted to members of the actual garrison. The conditions of sales in Army institutes and of trading carried out by local firms are so dissimilar as to render comparison impossible. The reply to the latter part of the Noble Lord's question is in the negative.

Is not this a clear case of trading being State subsidised at the expense of the taxpayer?

I do not think it is a clear case.

If you do this in Iraq how can you refuse to do it in England?

I think that is an argument, not a question.