asked the Secretary of State for Defence what is Her Majesty's Government's assessment of the threat on which current defence policy is based.

asked the Secretary of State for Defence what is his latest assessment of the military balance between NATO forces and those of the Warsaw Pact.

I would refer the hon. and gallant Gentleman and my hon. Friend to the assessment of the threat in Chapter I and the assessment of the military balance given in Chapter II of the Statement on the Defence Estimates.

While not seeking to embarrass the Secretary of State about the secrecy of his sources, may I ask him to confirm to the House that his intelligence organisation remains sufficient to enable him to make a good and proper assessment? Secondly, will he say whether his assessment at the moment is that the potential threat to NATO is increasing or decreasing?

Concerning the first question, I can assure the hon. and gallant Gentleman that our security and intelligence are adequate for the purpose that we require. As to the threat, the Warsaw Pact conventional threat is still very strong and has not decreased since I published my Defence White Paper.

Will my right hon. Friend, while realising that détente must be the basis of our policy vis-a-vis the Eastern Powers, take into account the great build-up as against our forces in Europe, and also take into account that recent disclosures clearly show that Russia not only supplied weapons to the Middle East but was fully cognisant of the attack that was to take place on Israel two years ago?

I would not detract particularly from the latter point that my hon. Friend makes, but it has nothing to do with the original Question on the Order Paper concerning the military balance between the NATO forces and those of the Warsaw Pact.

In view of the Secretary of State's remark that the strength of the Warsaw Pact forces is not decreasing, will he continue to do his best within the Cabinet to see that our forces do not decrease to danger point?

I valiantly struggle, on behalf of the House and the security of the State, to ensure that our forces are not reduced and that the security of the State is not endangered. So far I think I have managed, within the public expenditure reductions, to be able to make sure that the military involvement is not impaired.

Does not my right hon. Friend agree that both NATO and the Warsaw Pact Powers have enough weapons already to blow up the world a hundred times over? Since it will need only to be blown up once, what is the purpose of adding further to our defence programme?

As my right hon. Friend already knows, because of the recent visit of my right hon. Friend the Prime Minister to the Soviet Union we are earnestly seeking détente between East and West. There are two major conferences in being, one the Conference on Security and Co-operation in Europe, and the other the Conference on Mutual and Balanced Force Reductions between East and West. If we can succeed in both those endeavours, tension between East and West can be lessened and forces reduced.

Will the right hon. Gentleman please answer the question asked by my hon. and gallant Friend? Is it the Minister's information that the threat is at present increasing? If the answer is "Yes", does not it seem a very odd time at which to be reducing our contribution to NATO?

I repeat the reply that I gave to the hon. and gallant Member. The defence posture of the Warsaw Pact remains as it was prior to my defence review, and the threat is exactly the same.

asked the Secretary of State for Defence whether he plans to reduce the strength of BAOR in the next 12 months.

The strength of BAOR is constantly subject to marginal change as a result of unit changeovers and the need to meet commitments elsewhere, such as in Northern Ireland. We will not, however, make any reduction below our Brussels Treaty commitment in advance of mutual and balanced force reductions.

As the recent fall in the value of the pound has added close to £25 million to the cost of the British Army of the Rhine since publication of the defence review, can the Minister say what negotiations the Government are having with the West German Government about offset agreements?

That is a matter which we shall take into consideration fairly soon.

Does not my hon. Friend agree that one reason for the fall in the value of the pound is the enormous contribution to the deficit in the balance of payments which the British Army of the Rhine causes? After all these years, is it not time that the Government concluded an effective offset agreement with Germany, the country which wants us to stay there and the country most able to help us in our balance of payments effort?

This matter will be discussed in the new offset agreement which comes in, I believe, in 1976.

asked the Secretary of State for Defence if he will make a statement on the strategic significance for Great Britain and NATO of the reopening of the Suez Canal.

The Royal Navy will continue to deploy from time to time in peace time outside the NATO area and, in common with other navies, will benefit from the increased flexibility of deployment resulting from the opening of the Suez Canal. All maritime trading nations stand to benefit. As for NATO, the Suez Canal lies, of course, outside the boundary of the NATO area.

In view of the massive increase in the strength of the Soviet Navy in recent years and in view of the fact that, as the White Paper points out, this is out of all proportion to the needs of Soviet trade, can the right hon. Gentleman say what consequences flow from the reopening of the Suez Canal and whether this is the right time simultaneously to withdraw our forces from NATO ports in the Mediterranean area, which would be a new sea route, and deny ourselves the facilities of Simonstown?

The balance of influence in the Indian Ocean will not be significantly altered. It will grant increased flexibility to both sides. For the Soviet Fleet, the reopening of the canal will mean a reduction of 24 days in sailing time to the Indian Ocean, and we shall be able to be there 10 days sooner. It is flexible for both sides.

As for the Mediterranean, we still allow the Royal Navy to deploy occasionally in the Mediterranean with the naval on-call forces, and the hon. Gentleman will have noticed that since our statement about lessening our presence in the Mediterranean the French and the Italians have increased theirs.

Does my right hon. Friend agree that the best way of enhancing our status in the Mediterranean and the Middle East is never again to embark upon policies which would bring world hostility, close the Suez Canal and make the British nation look foolish, as happened some years ago?

I hope that the House learned that lesson long before my Defence White Paper. Even if it had not, the new defence posture brings us more into line with what we can do. We intend to maintain our presence in the central region of Europe. We intend to play a part in the approaches of the Eastern Atlantic. We intend to make sure that the home base is secure. Therefore, we shall have few opportunities to become involved in exercises of the kind which sucked us into international conflict elsewhere.

Is it not true that the Soviet Union enjoys a factor of two and a half times in the reduction of sailing time over our own as a result of the reopening of the Suez Canal and, therefore, that the greatest strategic advantage attaches to the Soviet Union? As a result, is not the maintenance of the base at Gan, which commands the exit to the Red Sea, now of primary importance to this country.

Gan has nothing to do with shipping and port facilities. It is mainly an air station in the Indian Ocean. We shall still have transit and communications facilities in Diego Garcia.

asked the Secretary of State for Defence if he will make a statement on the result of the meeting of NATO Ministers on 5th June 1975 regarding the defence of North Sea oil installations.

I assume that the hon. Member is referring to the meeting, not under the auspices of NATO, which was held in The Hague between officials of a number of countries with an interest in the protection of offshore installations. This was a wide-ranging initial discussion on this important and complex subject and it is expected that a further conference will be held later this year. I have arranged for a copy of a communiqué issued following the meeting to be placed in the Library.

Is it not likely that Western Europe will become more concerned with the bringing ashore of energy resources from the North Sea and that it is important that NATO should keep its eye on all present and planned installations there, including Norway's? What does the right hon. Gentleman intend to do to encourage NATO to show more activity and concern in this matter?

All NATO nations would not agree with the viewpoint of the hon. Gentleman that NATO should be involved primarily in the defence of the North Sea installations. Those who take a keen and detailed interest in defence affairs will know that there are countries on the northern flank which would hesitate to operate in that way. This was a meeting of officials of a number of countries—Dutch, German, French, Norwegian, Danish, Belgian and ourselves. We were trying to find how best to measure ways in which all our resources could be used against the threat of accident or malicious damage in the North Sea in peace time.

In the right hon. Gentleman's talks, did he get down in detail to what we are meant to be defending these installations against? He mentioned accident. Does he mean fishing hazards? Does he envisage that there will be any state of open war against these installations? Is it not essential to ascertain these facts before we can know how we can defend them? Is the right hon. Gentleman aware that the view of military authorities in Scotland, openly expressed, is that these installations are not defensible and that there is no way in which they can be defended?

I hope the hon. Lady will not try to build this up into a scare story. The North Sea rigs and installations are there, easily to be seen. Soviet naval gatherers occasionally come along to photograph and to measure them. If I were advising the House, I should say that this was not any military threat. It is because the Soviet Union needs commercial information to deal with undersea drill rigging itself. It wants to embark upon this. It lacks the technology. Our intelligence leads us to believe that, when the Russians carry out aerial photographic reconnaissance or when their intelligence-gathering vessels go nearby, it is to find out how commercially and technologically we have tackled this task.

Is not the suggestion that North Sea rigs are not able to be defended simply preposterous? What rôle do the Government see for Nimrods in North Sea defence?

As my hon. Friend probably knows, already we have two vessels patrolling the North Sea. We have another five vessels under consideration for contract especially for that purpose. We now have Shackletons, Vulcans, Buccaneers and also Nimrods on occasional surveillance activities for North Sea rigs.

asked the Secretary of State for Defence if he will make a state- ment on progress of the MRCA development programme.

Progress continues to be generally satisfactory.

Is the Minister aware that that is a short statement for a long programme? Is he in a position to comment on and preferably deny the reports which are abroad that the flight test programme is now something like six months behind and that it is to that extent delayed because of the late delivery, the non-delivery and the scarcity of flight test engines from Rolls-Royce Ltd.?

Clearly in an advanced technological project some difficulties are always experienced during the development stage. There were some hold-ups from Rolls-Royce due to industrial action, but delivery of the engines has now been resumed.

Does my hon. Friend accept the view put forward in the Second Report from the Expenditure Committee that as a result of the collaboration on the MRCA the costs are 25 per cent. higher? Does he accept that figure, and does he anticipate that all such collaborative projects will involve such a premium?

No, I do not accept it. From the figures I have had, this is clearly the most sucessful international collaborative project ever, in which the real escalation of costs has been minimal and has been carefully controlled.

The hon. Gentleman's unexpected interest in military matters gives me great satisfaction. Clearly any defence of this country is based on a combination of the economic health of the country and the measures taken to support it. Without economic health, no defence would protect these islands. However, no economic health in itself would protect us if we did not show the will to protect ourselves.

I am grateful to the Minister for educating the hon. Member for Caernarvon (Mr. Wigley) on his first incursion into defence matters. Will he deal with the persistent rumours that the MRCA engine still has serious teething troubles? Can he particularly say what action we are taking to obtain wider markets for the aircraft by selling it elsewhere in Europe, where the demand exists?

As I tried to point out earlier, in any advanced technological programme there are always problems in the development phase. What is unique about this programme is that it has taken place in such a spotlight of publicity. There is nothing untoward about the difficulties so far experienced. We will take whatever opportunities are open to us to commend the MRCA to a wider public.

asked the Secretary of State for Defence how many ships, RN or RFA, will be overhauled, repaired, etc., in the Merseyside shipyards from the present date to the end of 1975.

Royal Navy ships are normally refitted and repaired in the Royal dockyards. None is presently scheduled to be dealt with in a commercial shipyard.

It is planned, however, to refit about 15 Royal Fleet Auxiliaries in commercial shipyards during the remainder of 1975. Tenders for these refits will be invited from suitable shipyards, a number of which, like the Merseyside shipyards, are located in development areas.

While I am grateful to my hon. Friend for that information, may I ask him whether he is aware that there has been a serious shortage of this type of work in Merseyside with the result that at one time in the recent past there was the possibility of lay-offs and closures? Is he further aware that the way in which this work is distributed is unfair to Merseyside? Will he look at the questions raised about contract prices and delays, all of which have been strongly refuted by unions and management in Merseyside shipyards?

While I appreciate my hon. Friend's concern, I am sure he will recognise that a reduction in defence expenditure inevitably has consequences in this area as in others. We are at pains to put work of this kind with firms situated in development areas. When deciding how to award tenders, we have to take into account points like price, delivery dates, the loading of the shipyards concerned and the previous performance of shipyards.

Does my hon. Friend agree that it shows how ludicrous is the argument of those who seek to do away with all our defence forces that they start bleating only when they do not get work in their own areas? Would he not have expected my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) to be delighted that we do not have any naval ships which require to be repaired on Merseyside?

That is a question for my hon. Friend himself to answer.

asked the Secretary of State for Defence if he has any plans to make any further cuts in defence expenditure additional to those already published in the latest White Paper and announced in the Budget Statement.

No public expenditure programme can be guaranteed irrespective of the development of the economy, but our planning continues to be based on the broad level of capability decided on in the defence review.

Does not the right hon. Gentleman agree that that is an extremely cagey answer which will do nothing to increase Opposition confidence in the Government's serious intention to maintain our defence ability?

I am sorry that my reply disappoints the hon. Lady and others. It happens to be a fact of life. If there are major public expenditure cuts, defence must be involved. What perturbs me is that the hon. Lady and her hon. Friends keep pressing me to spend more on defence while I see that their economic and financial spokesmen are calling for public expenditure cuts of £4,500 million.

Does the Minister admit that our arms spending in both real and cash terms—much more so in cash terms—is going up and not down? Will he clearly dissociate himself from Conservative Members and, I regret to say, one or two on the Labour side who are arguing for cuts in industry, housing, education, health—in everything except arms expenditure, which they wish to increase? If there is any doubt about this, let my hon. Friend refer to Hansard to see that hon. Gentlemen said precisely that in last week's debate.

I hope my hon. Friend will realise that defence has certainly played its part in the public expenditure cuts that have so far taken place. I hope he appreciates that in 1975–76 we shall save £300 million, in 1976–77 we shall save £380 million, in 1977–78 £350 million, in 1978–79 £500 million and in 1979–80 £660 million. Therefore, we shall save a total of £2,190 million on planned expenditure on defence at 1974 prices over the next five years.

Does the Minister realise the concern that the Government are causing among young people in the South-West who contemplate a Service career? Is there any future for young people in the Services?

The savings I have announced to the House arise mainly because we have decided that we can no longer police the world. Our international posture is at an end. We are therefore withdrawing from Singapore, Gan and Mauritius and lessening part of our commitment on NATO's flanks. That is how we have been able to effect these savings. Young men who join Her Majesty's Forces know that their future will be geared towards the new alignment with Europe. In that we certainly have a rôle to play.

Does my right hon. Friend agree that any further defence cuts would be immensely damaging to the cause of multilateral disarmament? May I congratulate him on his firm decision to order the maritime Harrier for the Royal Navy? Can he say what rôle he envisages for that aircraft in the Eastern Atlantic, where the Russians are building up their forces?

I am much obliged to my hon. Friend for raising the subject of the maritime Harrier. This is indicative of the recognition of our new rôle in Europe and the Atlantic. We recognised that there was a threat from airborne surveillance by the Russian Bear aircraft. We have decided to fit our through-deck cruisers with the maritime Harrier, which will be able to stop and harry the Bear aircraft, preventing it from carrying out its surveillance activities, in the course of which it communicates information to long-range missiles at sea.

Does not the right hon. Gentleman have to admit that it is now the unanimous and publicly-expressed view of our NATO allies that the cuts he has announced are gravely damaging to the alliance? With that in mind, is not the least we can ask him to do to undertake that there will be no further cuts, for the sake of our country and of the people in the Services?

I agree that our NATO allies were seriously disquieted during the course of our defence review and at its conclusion. They publicly expressed their views. I am sorry that I cannot give the hon. Gentleman and the House a categoric assurance that defence cuts will not flow from any other public expenditure reductions. Obviously I cannot give that assurance. As far as I am concerned, if I feel that it will impair our rôle or the security of the State I will try to help.

asked the Secretary of State for Defence whether any reduction in Service personnel or civilian employment at RAF Boulmer, the RAF Acklington helicopter squadron or the Otterburn Training Area will occur as a result of the reductions in defence expenditure recently announced.

No reductions in Service or civilian employment will occur at these units as a result of the recently-announced cuts in defence expenditure.

That news and that assurance will be welcome in the communities concerned, whose relations with the people manning the Service installations are good. Does the Minister agree that in locating defence installations operational needs are paramount, but that an important consideration is the employment which the installations provide in areas where there is little alternative employment?

Yes. That is why we have tried to take account of development areas in framing the review which we have just announced.

asked the Secretary of State for Defence if he will investigate the amount of wastage among young recruits to Her Majesty's Forces; and if he will make a statement.

Investigations are already under way into the extent and causes of wastage. At this stage, therefore, I have nothing to add to the reply I gave my hon. Friend on 11th March this year.

Does my hon. Friend consider that one of the probable reasons is the unrealistic and misleading recruitment advertising campaign on television, which projects a picture of Army conditions which are more in keeping with Billy Butlin's holiday camp than reality? On reflection, as many young persons are anxious to leave the Services, will the Minister please consider allowing these young people to interrupt their apprenticeships after, say, three years and leave them the option of leaving or staying on?

I do not know where my hon. Friend has seen the advertisements to which he has referred. If, however, he seriously thinks that there are advertisements which are misleading, I hope he will refer me to specific examples. It is my experience, having looked at all the recruiting material recently introduced, that the Forces are, as never before, giving a realistic picture of what life will be like in the Services, for the Services' self-protection, to avoid the wastage which my hon. Friend obviously wants to avoid.

We have gone a long way towards providing a more flexible career for young people entering the Services. However, I shall be glad to look at my hon. Friend's suggestion and let him have my views on it.

Does the Minister accept that there is great disillusionment among young Service personnel following the recent pay review? Owing to the extra charges which they must suffer at the same time, young Service people receive nothing like the amount of increase that was announced.

If there is disillusionment, I am sorry. That is not my experience after talking to probably as many young Service men as the hon. Gentleman. We set up an independent pay review body. Our commitment—the commitment of any Government—is to implement the results of that review. That is exactly what we did.

asked the Secretary of State for Defence what proposals he has for standardising the next generation of tactical missiles throughout NATO.

As with other equipment, I should like to see a much greater degree of standardisation of the various kinds of tactical missiles in the next generation. We for our part will be looking for cooperation of one kind or another to meet most of our future requirements for such missiles.

Is the Minister aware that the European nations of NATO are producing no fewer than 18 different kinds of surface-to-surface and surface-to-air missiles and 16 anti-tank weapons, all of which duplicate each other? The real problem is one of basic design study. Will the Minister give consideration to NATO undertaking this study for all of us, since we are now all fighting the same war?

Yes. I appreciate the authority of the hon. Gentleman in view of his rapporteur activities on this subject at Western European Union. I can tell him. however, that the conference of national armaments directors is now attempting to achieve standardisation of the next generations of weapons, and meetings are being called solely for that purpose.

Will my right hon. Friend take note that many Government supporters hope that there will not be a new generation of tactical missiles? Is it not stupid that mankind should continue to embark on this never-ending arms race, which represents a tremendous threat to humanity in military and economic terms? Is it not time that we heard more about disarmament and détente than we hear on these occasions when we discuss military matters?

I am sure that my hon. Friend was present when I spoke about détente in answer to an earlier Question. Let him not think that when we talk about tactical missiles they might be nuclear missiles. At the moment Her Majesty's Government are considering four new types of missiles, which include helicopter-launched anti-tank guided weapons, crew-portable anti-tank guided weapons, undersea guided weapons and helicopter-launched anti-ship guided weapons—all of which, I know, British industry would like. I doubt whether it will get them all. Many thousands of jobs are at stake in the aircraft, aeroengine and missile industries as a result of these conventional missile weapons.

On the assumption that this country will need to co-operate with our NATO allies in the defence of the Western world, may I ask whether any estimate has been made of the savings to this country of standardisation within NATO?

No, I do not think that an estimate has been made of the savings that could be made. Obviously they are considerable. That is why the Eurogroup within NATO—a group of nations involved in trying to bring together equipment requirements for the Western Alliance—is so essential and why its work should be processed. That is one of my intentions as chairman.

Will my right hon. Friend confirm that the balance of advantage of specific tactical nuclear weapons to the West is something of the order of three to one? Is not this an area in which we could easily afford to take an initiative at the Vienna talks to achieve a reduction of the presence of these weapons, which are of extraordinarily devastating power, on both sides?

I do not agree with the figures quoted by my hon. Friend. No doubt his latter point will be taken into consideration in the course of that conference.

asked the Secretary of State for Defence if, in view of recent purchases of American military aircraft by some European NATO countries, he will now initiate a meeting between NATO members within the EEC to discuss the establishment of a policy for production of aircraft within the EEC member countries, for miliary and economic reasons.

The European member nations of NATO will be considering the implication for European defence industries of the recent decisions by four of them to acquire the American F16 aircraft. They will doubtless hold joint consultations, but the precise form and scope of these remains to be considered.

Does the right hon. Gentleman agree that the French tactics in the recent battle for this order tend to show that no single European nation seems able to meet and beat the ruthless competition of the American aircraft manufacturers? If he accepts that, and if he accepts the overriding economic and military importance of a powerful and successful aviation industry, will he now take steps to launch such an initiative as is described in the Question?

First, if the House wants to draw a lesson from the recent exercise, European countries with airframe and aero-engine industries must cooperate, otherwise in future we must buy cheaply off the American shelf. The result will be that the European aircraft industries will gradually wane and will not be able to survive.

Secondly, I am keen to move towards the next stage of the two-way street of moving more defence equipment between American and Europe. To do so satisfactorily, however, the European industrial armaments industry must be prepared to co-operate so as to get more defence equipment from Europe on to the American street.

Will my right hon. Friend explain to me the paradox between the so-called claim of the Common Market that by combining together we should be able to compete with the super-Powers—namely, America and Russia—although here is an example, only days after the referendum result, in which, after 18 years of co-operation, even France and Belgium cannot agree whether this competition should take place or whether they should buy their arms, as was the case with Belgium, from America?

If my hon. Friend were more conversant with the Treaty of Rome he would know that it excludes the consideration of defence problems.

Does the right hon. Gentleman agree that the decision of the Belgian Government concerning the replacement did not appear to correspond with any laid-down operational requirement? The French aircraft appeared to be an interceptor while the American was an inadequate ground attack aircraft. What efforts were made by British industry, or by the Minister's Department, to put forward the advantages of the Jaguar, which exists, or the MRCA, which, though more expensive, would exist on the same time scale as the American aircraft?

I personally placed the Jaguar aircraft concept before the Eurogroup on two occasions, and the concept of the two-rôle requirement for the F104 replacement came out of the Eurogroup. As the right hon. Gentleman must know, the four NATO nations were looking for an aircraft that would satisfy the two rôles, ground attack and high intercept. The Jaguar will satisfy the former but not the latter. Therefore, the four nations decided that the F16 was better placed to satisfy those two rôles than was the Jaguar or, indeed, the Mirage Fl. The MRCA has a longer time scale of decision, and it would be far too late for the four nations to take a decision. I hope in the next generation, when we have the three-nation trilateral co-operative effort in Europe—Germany, Italy and the United Kingdom—to be able to bring about more standardisation in our aircraft for the NATO Alliance.

Does my right hon. Friend agree that the French would do better for themselves if they were full members of the Eurogroup, as they are fully entitled to be?

As I have indicated, the concept grew out of the Eurogroup. France is entitled to sit as a member of the Eurogroup. I am sorry that there is a vacant chair to be filled. If the French feel that they can play a part in helping us within NATO and the Eurogroup to cope with our common defence requirements, there is a part they can play inside the Eurogroup.

Does the right hon. Gentleman agree that it is more important to preserve and improve Europe's aerospace manufacturing capability than to waste time on announcements of the costly nationalisation of British industry? Will he get his priorities right?

The hon. Gentleman, who as usual is jumping in without having done his homework, must fully realise that even before we came to office there was a proposal on the board for the merger of Hawker Siddeley and BAC. We are only taking the logical step to streamline our industry and make it more competitive, if necessary within Europe, but certainly against the United States.

asked the Secretary of State for Defence if he will list in the Official Report those countries in which members of the Special Air Service Regiment are currently operating.

I have nothing to add to my reply to my hon. Friend the Member for Harlow (Mr. Newens) on 20th May 1975.—[Vol 892, c. 355.]

Is my hon. Friend aware that I am not in the least surprised that he has nothing to add to his previous reply? As his right hon. Friend the Secretary of State for Defence said that it was no longer his aspiration to police the world, and as no doubt my hon. Friend is helping his right hon. Friend to go through the estimates with a fine-tooth comb to try to find something else to cut, will be consider the SAS as a candidate? Many Government supporters do not consider that the activities of the SAS in Northern Ireland, Oman, Malaysia, Thailand or wherever the SAS might be are any credit to this country.

First, I must put my hon. Friend right. The SAS is not involved in Northern Ireland. The House was told in the Statement on the Defence Estimates that it was the Government's intention to continue to give military support to the Sultan of Oman. The level of our assistance is kept under regular review.

is the Minister aware that many Opposition Members are getting increasingly bored with the totally uncalled-for attack on what is perhaps the finest regiment in the British Army? It is a volunteer regiment which is probably the best-equipped and best-trained in the Army. Will the hon. Gentleman point out to his hon. Friend the Member for Lewisham, West (Mr. Price) that the regiment has also an important rôle in the defence of Western Europe?

Yes, Sir. I am obliged to the hon. Gentleman for his comments. The SAS is a fully volunteer regiment and it is a fine regiment which is doing a fine job. In spite of what my hon. Friend said, the main rôle of the SAS is in the NATO context.

asked the Secretary of State for Defence if he will make a statement on the official visit of Her Majesty's ships to Brazil in May 1975.

A visit to Brazilian ports was made between 7th and 14th May by a group of Royal Naval ships led by HMS "Ark Royal".

What effect has the visit had on the Vosper Thorneycroft order?

At present six frigates and three submarines are being built for the Brazilian Navy both by Vosper Thorneycroft and by Vickers. That goes ahead.

asked the Secretary of State for Defence whether the Chieftain tanks in service with BAOR will be retrofitted with the new Rolls-Royce diesel engine that is to be fitted to the Chieftain tanks to be supplied to Iran.

The Army has no plans to re-engine its Chieftain tanks with Rolls-Royce engines.

Does not the Minister agree that it seems to follow that we have not learnt from the German experience that it is important to have good engines in our tanks? Will he say how far the trilateral tests that have been going on are likely to affect the Anglo-German battle tank proposals?

I do not agree with what the hon. Gentleman has said. Even the experts do not agree on the precise size of engines for tanks. The tests are still going on and have yet to be evaluated.

asked the Prime Minister if the public speech of the Secretary of State for the Environment concerning the need of policies to combat inflation made at Grimsby on 8th June represents Government policy.

asked the Prime Minister if the speech by the Secretary of State for the Environment on economic matters at Grimsby on 8th June represents the policy of Her Majesty's Government.

With permission, I will answer Question No. 01 and Question No. 07 together, Sir.

What about No. Q19?

I have nothing to add to the reply which I gave in answer to a supplementary question from the hon. Member for Devizes (Mr. Morrison) on 12th June.

Does the Prime Minister recollect that that was the speech in which the Secretary of State for the Environment criticised Government policies as having put this country on a disaster course, indeed a suicide course? Is he aware that since then, on Saturday last, the Chancellor of the Exchequer said that there were only six weeks to that disaster? Is he further aware that today there are only 39 days left to disaster day? When will he act?

The hon. Gentleman has totally falsified what my right hon. Friend said. He did not say that it was the consequence of Government policies. If the hon. Gentleman had studied Government policies he would know which Government to blame. On Saturday I spoke on exactly similar lines to those of my right hon. Friend the Chancellor of the Exchequer. He referred to the need for the urgent action that we are working on. He said "at the time". He did not say that we were six weeks from disaster. The hon. Gentleman should look at what my right hon. Friend said and not falsify it in this manner.

Will my right hon. Friend confirm that, whatever actions are taken by the Government to combat inflation, he will ensure that the Government's priorities will mean that the sick, the old and the disabled who need a compassionate society to care for them will not be in the front line of suffering as they have been in past attacks on inflation by the Conservative Party?

My hon. Friend is absolutely right to stress that. What we have said, and what I said on Saturday, is that anyone who tries to get and in future succeeds in getting more money than the country can afford will be causing the greatest suffering of all to the people who cannot look after themselves, such as those mentioned by my hon. Friend.

As last month the Prime Minister delayed taking anti-inflation action because of the referendum and this month his reason for delay appears to be the Woolwich, West by-election, may I ask him to recognise that the nation is coming to feel that he is unfitted, unwilling and unable to take any counter-inflation, action whatever? If that is so, will he now resign?

The hon. Gentleman is wrong in both his hypotheses. What is important is to get the right answer, and the right answer must be on the basis of consent and consensus.

Does my right hon. Friend still agree with the statements that he and many of his colleagues made during the last General Election campaign when he said that to help the old, the sick, the unemployed and those in the bottom strata of our society we should need the Industry Bill and associated measures of public ownership? Has he noticed that, notwithstanding the local difficulties with which we are beset, so full of contradictions are the Opposition in the Woolwich, West by-election that the local candidate has had to have his election address rewritten three times to comply with the statements made by the right hon. Member for Worcester (Mr. Walker), the right hon. Lady the Leader of the Opposition and the right hon. guru of the Tory Party?

My hon. Friend correctly recalls what I said in the election campaign and what I have said ever since on this question. He will, I know, be the first to agree that, as I have just said, since there are limited real resources available in this country from production and we have to allow for exports, oil prices and so on, if more is taken out by some who have power at least to attempt to take it out, those he has described suffer. The Industry Bill is going ahead and a number of amendments are being tabled tonight for Report which will fulfil what has been said by my right hon. Friends who have been in charge of the Bill up to now. I refer to my right hon. Friend who was in charge of the Bill and my right hon. Friend the Secretary of State for Industry.

With regard to what has been happening at the Woolwich, West by-election, I was not so much concerned with the position of the Conservative candidate as with the fact that on two successive days this week radio and television, not to mention the Press, have been full of total contradictions between leading Privy Councillors under the command of the right hon. Lady the Leader of the Opposition.

As responsibility for the economic position of the country is that of the Government, and as further delay and uncertainly serve only to damage the pound daily, will the Prime Minister say when he expects to be in a position to bring a package of economic measures before the House for its approval?

As I have said, what is important—[Hon. Members: "Answer".] What is important, as I have said, is to get the right answer and the right package. That will not be the package that the right hon. Lady proclaims even without support from her colleagues. It is more important to get the right answer on the basis of consent —[Hon. Members: "When?") It is more important to get the right answer on the basis of consent and consensus, which takes time—the Opposition tried to do without that when they were the Government and, of course, they failed—than to get the wrong answer on a basis that divides the country. My right hon. Friend the Chancellor of the Exchequer set a timetable. I hope that the answer will come considerably quicker than the timetable he has set.

Will the Price Minister at least undertake to bring measures before the House before it rises for the Summer Recess?

Yes, Sir. Any measures brought before the House—and I stress the important, with which I hope the right hon. Lady would agree, of getting consent and consensus from those concerned—should be reported to the House, I entirely agree with the right hon. Lady, before the recess.

Surely the Prime Minister will confirm that for Privy Councillors to disagree on policy matters is nothing new and that he is not experiencing it for the first time. To revert to the speech of the Secretary of State for the Environment, does the Prime Minister remember that his right hon. Friend said that the Government's most urgent task was to bring about basic changes in the social contract to make it an effective weapon? Does the Prime Minister agree with that priority? If so, what changes would he like to see?

Yes, I agree with that priority. That has been stated both by my right hon. Friend the Chancellor of the Exchequer and by myself before the speech was made by my right hon. Friend the Secretary of State for the Environment. The changes that there should be in the social contract are currently being discussed, as the right hon. Gentleman will know, by the TUC. The TUC and the CBI are meeting today for discussions on these matters. I and my colleagues have had a number of meetings with both organisations.

asked the Prime Minister if he will make a statement on his most recent meeting with the TUC General Council.

I have had no recent meeting with the TUC General Council, although I am in regular touch with TUC leaders whom I have met on four occasions since the recess.

Does my right hon. Friend agree that many trade union leaders have already expressed their readiness to co-operate with the Government in policies aimed at stemming the rate of inflation? Does he accept that the good will which the trade union movement is showing towards the Government stems in large measure from the consistent manner in which the Government have carried out their side of the social contract? Does he accept that continued trade union co-operation must depend upon the Government having policies aimed at keeping down the cost of essential items in the family budget? Therefore, will my right hon. Friend look again at the policy announced by his right hon. Friend the Secretary of State for the Environment and its effect on council rents?

I entirely agree with my hon. Friend about the extent to which trade union leaders are showing tremendous courage, and particularly in the proposals they have put forward for relating wage settlements in future to the target rate for price increases and not to any past period. This is a very big step forward and I know that Conservative right hon. and hon. Members will welcome this fact. One would like to hear them say it from time to time. This is a very important matter and it is certainly the fact, going back to the original agreement about the social contract in 1973, that the Government have fully carried out what we undertook to carry out in the social contract. In those circumstances, we are entitled to expect a response, which we have substantially obtained, and particularly in the latest proposals put forward by the TUC.

My right hon. Friend dealt with rents in considerable detail on 16th June. Having referred to the fact that we froze rents last year and have moderated rent increases this year through additional subsidies, he went on to give figures showing the increase in rents compared with other costs during the past two years. He said, of course, that while rents are an important part of the cost of living, the contribution of rents to housing costs has been steadily falling over the past few years.

Instead of the rather absurd charade of warning the TUC that if it does not agree to a tougher so-called social contract there will have to be further public expenditure cuts, would it not be better for the Prime Minister to tell the truth—namely, that there will have to be further public expenditure cuts anyway?

The question of public expenditure is always under review at this time of the year by every Government. Indeed, I think that it was under review by the previous Conservative Government although they never carried out their promises in that regard. It is under review with a view to the publication of the National Expenditure White Paper in the autumn. This process is always going on. I made no threat to the unions as the hon. Gentleman suggests. I stated what is fact in relation to the position of the Government as the paymaster and the treasurer, on behalf of the taxpayer, of the publicly-owned industries—namely, that where there are income settlements or wage settlements which take too much out there is a limit. We shall not allow it to be met now by subsidy, by taking it out of the public or by borrowing. That must mean either a more economical use of labour, with all that that means for jobs, or accepting incomes which are related to what is available within public industry. That is what I said last Saturday, and said very clearly.

Will my right hon. Friend further qualify the answer he has just given—namely, that high wage settlements have enabled the British people to take out more than they have put in? Does he not agree that if the Government were to replace the free market price mechanism by a planned pricing strategy, and at the same time replace free trade externally by planning imports, it would not be possible, whatever wage settlements were made, for the British people to take out more than they were putting in?

No, Sir. I made it clear that if in any industry or concern, public or private, more is taken out than can be afforded by that undertaking, be it a nationalised concern or private industry, the result is bound to be, sooner or later, an effect on jobs unless we are prepared to subsidise. As regards a pricing strategy, we have had a strong price strategy from the time we came to office. It is a fact that traders, particularly in food distribution, have suffered very considerably as a result of the tightening of the price strategy. As regards import controls, apart from those which we apply at any time where there is evidence of dumping or unfair trading practices—and we are considering a number of allegations—I do not believe that a large trading nation like Great Britain will succeed in keeping up its exports along with other countries in this chronic world depression by taking such action. I do not believe that we have anything to gain in starting a rat race by cutting down international trade.

asked the Prime Minister what proposals he intends to put to other EEC Heads of Government about democratising the Council of Ministers.

I see no need to make such proposals. The Council consists of Ministers of the Governments of the member States, each of whom is accountable to a democratically-elected Parliament, each of whom is concerned with his own principal national interests; and the same—I can tell the House from my own experience—is certainly true of the now regular Heads of Government meetings.

Is the Prime Minister aware that the present system is totally unsatisfactory to a very large number of people? Because so many different interests have to be resolved, the horse trading that goes on means that certain important interests for the British people may well be undermined. This Parliament can only ask questions of Ministers when they return from Brussels. The decisions made in Brussels stand, and we cannot undo them. Does my right hon. Friend think that there should be a change? Will he look again at this matter?

As I have made clear at the Council of Ministers, this is happening increasingly, and it is also the case that at meetings of Heads of Government national interests are strongly pressed by individuals. My right hon. Friend the Foreign Secretary is in Brussels today for meetings of the Council of Ministers. He may not be a horse trader, but he is a successful cattle trader. I have every confidence that he will be fighting today as he has always fought, and as the country acknowledged in its recent vote—for British interests. The only criticism I have heard put forward by the German Federal Chancellor is that he feels that the Council of Ministers should be more centralised in the hands of one Minister, the Foreign Minister. He feels that sometimes Agriculture Miniters tend to represent European bloc farm policies rather than the policies of their Governments.

Does the Prime Minister appreciate that there are two functions in the Council of Ministers? In addition to the function which the hon. Lady has, with characteristic elegance of idiom, characterised as horse trading, there is also the important legislative function which paradoxically the Community vests in the Council of Ministers and not in the legislature. Cannot that function be exercised in public? Will Her Majesty's Government so recommend?

I agree with the right hon. and learned Gentleman that the Council of Ministers is a policy-making body. It is not engaged only in negotiations. [An HON. MEMBER: "What about law-making functions?"] Yes, it is also to some extent a lawmaking body. It has been an increasing development in the last few months that when the Heads of Government meet the Commission leaders are present, and when the Heads of Government take a decision the Commission representatives go away and try to work out how best it can be carried out.

As for meetings in public, whether of the Council of Ministers or of Heads of Government, I can see certain advantages for the entertainment media. I have a feeling that the fight put up there for national interests would cause those meetings to go much further into the night and, indeed, to take more days than they do at present.

Does not the Prime Minister think that the Council of Ministers would be more democratised if his right hon. Friend the Secretary of State for Scotland were to attend it regularly in view of his known anti-Market views and considerable responsibilities for many aspects of decision-making in respect of 5 million Scottish citizens?

I assure the hon. Lady that if there were any meetings at which the interests of Britain, of this House or of Scotland would be best served by my right hon. Friend attending, he would certainly go.

Does my right hon. Friend agree that it is just as important, if not more so, to democratise the European Assembly and to make the Ministers accountable to that body as well as to respective national legislatures? Will he say when he will be in a position to make a statement on the possibility of a firm Government view on direct elections to that Assembly?

Not yet, Sir. But my hon. Friend will be aware that, within a few hours of the result of the referendum being known, I said in public that the Government would be making a recommendation to the Parliamentary Labour Party that we should now take up the scats available to us in that Assembly. My hon. Friend will be aware of the decisions taken by my Labour colleagues which should lead to the selection of Members later this week to attend the Assembly. This is now taking place.

Changes in the powers of the Assembly require deep consideration. My hon. Friend will know that these matters have been continually discussed in Strasbourg and also that the Belgian Prime Minister, who is coming to this country in the very near future, has been charged by his fellow Heads of Government to make proposals about future political developments within the Community.

From a United Kingdom point of view, would not the best way of making the Council of Ministers more democratic be to allow this House better opportunities to discuss EEC matters with the Ministers concerned instead of our having perfunctory debates in the middle of the night, which is all the Lord President has so far allowed us?

This is a difficult problem. Nobody is satisfied with the present position. We now have available to us the report of the Select Committee which has made certain suggestions. I should point out that the Labour Government have allowed considerably more time—I appreciate that it is not to everybody's satisfaction, and admittedly the debates take place late at night—than was allowed by the Conservative Government in debating subordinate European legislative proposals.

Since the Paris statement issued last December by the Heads of Common Market States indicated that it was unanimously agreed that the veto was likely to be undermined in future, and secondly that the permanent representatives were to get greater powers, will my right hon. Friend say whether there will be resistance by the British Government to both these suggestions?

No, Sir. I think I have already answered that question. Following my statement after the Paris summit last December, the reference in the communiqué to the veto was simply a declaration that so far as possible we would not use the veto unnecessarily. That was what it was really about. There had been occasions in meetings of specialised bodies where the veto had been used rather frequently and where, after consideration and reference back, the matter had not been pursued. But nobody said anything at the summit—I did not do so and the communiqué did not record any such decision—to imply that the unanimity rule was breached in any way or that the right of what my hon. Friend calls the "veto" had disappeared. The situation is exactly as it was in that respect. But it was felt that the veto had been used a little too much, particularly in specialist gatherings.