asked the Secretary of State for Defence if he will issue a detailed statement explaining the savings on the defence budget envisaged as a result of the proposals concerning the Admiralty Compass Observatory in Slough.

We shall be giving the staff and trade union sides of the Whitley Council our latest estimates of these savings as part of the consultation process.

I thank my hon. Friend for the careful attention that he has given to me on behalf of my constituents in relation to the closure of this establishment in the Beaconsfield division. Does he agree, first, that it would appear that the consultative document that was issued about this establishment was not consultative, in that the decision had already been taken and, secondly, that the absence of any financial statement about the savings supposed to take place from what was to happen to the Admiralty Compass Observatory led some people to believe that transferring the work to private industry was not a defence cut at all?

I am obliged to my hon. Friend for her kind remarks. The first part of her question put the position fairly, and I would not dissent from it. We think that it is sensible to wait until we have the revised figures, which we hope to have some time next month, before publishing them.

Will the Minister of State, by the time that I see him at 2.30 p.m. tomorrow, have these or the provisional figures about this observatory in my constituency? It will be difficult for me even to formulate the representations which I wish to formulate unless I know how the Ministry of Defence thinks that it will save money by switching orders from its own establishment to outside industry.

The cut-back is related to the requirement imposed on the Ministry of Defence to reduce its total number of employees. Certain painful decisions had to be taken, some of them at fairly short notice. I shall endeavour to be as helpful as I can when the hon. and learned Gentleman comes to see me tomorrow, but I cannot tell him, as I have just said to my hon. Friend the Member for Eton and Slough (Miss Lestor), what the up-to-date figures will be.

asked the Secretary of State for Defence to what extent the Government's latest defence cuts will mean a reduction in Great Britain's commitment of forces to NATO.

It is impossible to be precise at this stage, but, as I have stressed repeatedly, we intend to keep the effect on our front-line contribution to the Alliance to the absolute minimum.

Is not the Secretary of State ashamed to preside over a policy which runs our forces below the bedrock minimum for our security? If these cuts can be made without damaging our security, why were they not made before?

The Conservative Administration made three cuts in 1973. In real terms, we are spending less than we should be spending next year. I think that, not only in defence, but in many other areas, we would all like to spend more in terms of public expenditure. However, we do not get much encouragement from the Opposition Benches to that end.

I admire my right hon. Friend's resolution about keeping front-line troops in Germany. When will the long-standing wrangle between us and West Germany over support costs end? Surely we cannot keep talking about it and not have a new agreement?

We are anxious to have a new agreement, but I cannot say today when that will be possible. At the end of Question Time today the Prime Minister intends to inform the House of his discussions with the West German Chancellor and his colleagues over the weekend.

Surely the Defence Secretary knows that the distinction which he and his predecessors have tried to draw between the front-line and support arms is entirely bogus. Will he stop using it?

It is not bogus. There are quite a number of worthwhile and useful economies which, in any event, we would seek to make by using modern techniques—for example, in the stores and other support facilities in this country. I think that any Administration would wish to go along with such economies. Although the deferment of building, and so on, is sad, we cannot in one year do everything and make up for the neglect of many years. These matters are less essential than maintaining our front-line forces.

asked the Secretary of State for Defence if he will increase the special daily payment made to members of the Armed Forces serving in Northern Ireland.

No, Sir.

Is it not the case that since this special payment was introduced on 1st April 1974, its true value has been eroded by more than 50 per cent., and that a daily payment of 79p would now be required to bring it up to the level then decided by the Government? Does not the Minister owe it to our soldiers in Ireland to bring the payment up to the purchasing power that it had when first introduced?

It is true that bringing it up to its purchasing power when first introduced would mean that it would have to be 80p. However, having said that, I should add that the pay of the Armed Forces is governed by the Armed Forces Review Board, which is an independent body. We accepted all its recommendations last year, and they did not include a recommendation to increase this allowance.

asked the Secretary of State for Defence if he will make a statement on the recent declaration by the NATO Ministers Defence Planning Committee on the first-use of nuclear weapons.

At their meeting in Brussels on 9th and 10th December the NATO Foreign Ministers emphasised that the member States of the Alliance could not, in the event of their being attacked, renounce the possible defensive use of any of the means available to them.

It is not clear that if NATO launched nuclear missiles first, it would mean suicide, because of immediate retaliation?

I do not think that the NATO Alliance has any intention of indulging in aggressive action at all. The question, which is not a new one, is whether the renunciation of the first use would or would not assist us in our deterrent posture, and the member countries of the Alliance have decided that it would not.

Is the Secretary of State aware that the more that the Government continue policies of cutting away at our conventional forces the more likely it makes the thing that worries the hon. Member for Salford, East (Mr. Allaun), which is a first strike by this country in nuclear arms, the only way out?

The hon. Gentleman should be aware that for 30 years we have accepted that we cannot conduct the defences of this nation entirely on our own. We are part of an Alliance, in terms of both nuclear and conventional capability. As I have said at some length, we are playing and shall continue to play a full rôle in that collective defence.

asked the Secretary of State for Defence how many Service hirings are currently occupied by ex-Service men or their families.

Ten, Sir.

Does the Minister realise that a large number of Service hirings are from time to time occupied by families who have nowhere to live, and that it is the fault of the local authorities of origin from which the Service families come, which do not take proper note to Circular 54/75, issued by the Department of the Environment, which asks local authorities to give sympathetic consideration to families who come from their areas? Will the Minister seek to work with the Department of the Environment to revise that circular and try to give better home prospects to families who come from their areas?

If there are any particular cases that the hon. Gentleman has in mind I shall be only too happy to look into them. The Ministry of Defence keeps in close contact with local authorities in cases where there are problems about ex-Service men having to give up hirings to which they are no longer entitled. However, I am not aware in general of many problems, although, as I have said, if the hon. Gentleman has a particular case in mind I shall be happy to look into it.

Bearing in mind the appalling hardship and nervous strain that is imposed on Service families who are subjected to this state of affairs, is it not totally unjustified that in many cases my hon. Friend should have to seek a warrant for possession before local authorities are prepared to rehouse? In those circumstances is it not absolutely essential to issue another circular to replace Circular 54/75?

I am always happy to look into points raised by my hon. Friends, and I shall be very happy to discuss this matter with my right hon. Friend the Secretary of State for the Environment, As I say, at present only 10 Service hirings are being occupied by ex-Service men and their families.

It is a bigger problem.

I am certainly happy to look into any aspects that have not been drawn to my attention.

asked the Secretary of State for Defence what discussions he has had with other NATO Defence Ministers about the latest defence cuts.

As I explained to the House on 12th January, I have already informed NATO, through the Secretary General, of the defence budget reductions. We shall discuss the outcome of our study on 1977–78 as soon as it is ready. For 1978–79 there is time to consult NATO fully and I have undertaken to do so at an early and formative stage in our study of the measures required.

Will the Secretary of State now kindly answer the question put to him a few moments ago by my hon. Friend the Member for St. Albans (Mr. Goodhew)? Is it not perfectly clear that every time we cut our conventional forces in Europe we make it more likely that at an early stage of a future conflict we shall have to resort to nuclear weapons?

I have made it clear that we stand by the commitment that we have to maintain BAOR at its present strength unless and until it is possible to reduce it as a result of a success in the multilateral force reduction negotiations that are taking place, so we have no intention of reducing our conventional forces assigned to NATO on the central front.

When my right hon. Friend attends the Cabinet in order to discuss devolution on Thursday morning, will he suggest that in the referendum there could be a question such as "Though it is regarded as absolute operational nonsense by NATO, do you favour a tartan navy, a tartan army and a tartan air force?"?

I have not yet seen the Cabinet agenda for Thursday, but I doubt very much whether the question of a tartan navy, army and air force will be among the items that we shall be discussing. However, I am aware of my hon. Friend's point of view. I think that it would be very unwise if devolution were to go so far as having separate defence forces for the component parts of the United Kingdom.

Will the right hon. Gentleman assure the House that his answer just now—that there is no intention to reduce our conventional contribution to NATO—means that there will be no further cuts in the logistical support for the Rhine Army, which has already been seriously deprived of its ability to do its existing job by reason of the cuts already made?

I do not accept the suggestion that the Rhine Army is not in a proper state of readiness should it be called upon to perform its task. It is well recognised that we contribute in quantity and particularly in quality to the defence forces of NATO. Obviously, in every field of endeavour those concerned would like things more up to date, and more of this and that, but I think that we compare quite favourably with most NATO countries in the nature of our contribution.

Wearying though my right hon. Friend may find the task, will he continue to try to educate Opposition Members to the simple proposition that no country can be militarily strong if it is economically and financially weak?

I am sure that my right hon. Friend is right in saying that the economic strength and industrial regeneration that the Government seek to achieve will also play a very important part in our contribution to the Alliance.

Is it not quite clear that the Secretary of State gave no proper notice to the NATO Defence Ministers meeting that he attended that cuts in defence expenditure were to be made? Will he admit that he assented to a communiqué that said that NATO forces should be maintained and not reduced, and further, did he not agree, as soon as he came home, to cutting defence, which he had agreed not to cut? How can he possibly justify that behaviour, not only to our Allies but to this House?

I have explained to the right hon. Gentleman before that the discussion of these matters did not take place in the normal discussion of the Defence Planning Committee. In my recollection there has never been a com- muniqué issued by NATO after such a meeting, or any report of the Military Committee of NATO, that did not express dissatisfaction with the present level of forces and, quite properly, the need, on military grounds, for an increase. The right hon. Gentleman must have seen them year after year when he was in office.

asked the Secretary of State for Defence if he will make a statement on the future of the sovereign base areas in Cyprus.

There are no plans to alter the current level of British Forces in the sovereign base areas in Cyprus.

Does the right hon. Gentleman appreciate that Britain's presence in Cyprus is welcomed by both the Greek Cypriot community and the Turkish Cypriot community and is invaluable to the United Nations peacekeeping force on the island? Does he further appreciate that our NATO Allies are greatly concerned that Britain may he contemplating reducing its role in this exposed southern flank?

I have told the hon. Gentleman that we have no plans for altering the current level of our forces stationed in Cyprus. I went there for a few days early in January and visited all the units. As the hon. Gentleman says, I sensed that our presence was welcomed by both communities in Cyprus.

Will my right hon. Friend confirm that there is an important link between the fact that we have forces stationed in Cyprus and our status as a guarantor power of the Geneva Agreement? Will he assure the House that in moving towards some sort of agreement on Cyprus our forces and our presence on the island can play a part in reassuring both sides?

My hon. Friend tempts me to go into the realm of my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs. I am sure that all parts of the House would like to see a settlement of the Cyprus problem, but the responsibility for that lies with my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, and questions on policy should be addressed to him.

Will the right hon. Gentleman confirm that he recognises that nothing would do greater political damage to the unity of NATO than for Britain to leave the sovereign base areas, with all the consequential grounds for potential disagreement between the Greeks and Turks as to who should take over those areas?

It is a very strong statement to say that nothing could do more damage than a particular course of action. However, as I have already made clear, I attach importance to our presence in Cyprus in present circumstances.

asked the Secretary of State for Defence what are the latest figures available for the number of British troops in Germany, the number of German civilians employed and the balance of payments cost; and what progress has been made in obtaining adequate offset arrangements from the German Government.

I have nothing to add to the answer I gave to my hon. Friend on 14th December.

In view of the statement made yesterday by the Prime Minister and Helmut Schmidt, indicating that an offset agreement is likely in the next two or three months, will my right hon. Friend assure the House, and make it clear to the German Government at the same time, that there is no possibility of our accepting anything like the whole or the great bulk of the costs?

I have explained to the House and to my hon. Friend before that it is not the practice for the Ministry of Defence to take the lead in such negotiations. As I have already stated, my right hon. Friend the Prime Minister is to make a report to the House on the talks that took place with Chancellor Schmidt over the weekend. I do not wish to anticipate my right hon. Friend's report at this stage.

Does the right hon. Gentleman appreciate that the value of the NATO Alliance, of which Britain is a part, is immense in that we are able to station troops in Germany and train them there, and that that cannot necessarily be measured purely in terms of a sterling-deutschemark offset?

I accept, as I have said previously, that our presence in Germany is part of the collective NATO defence. In any event, offset agreements in the past have been only a part, or a small contribution—nevertheless, a helpful contribution—to the foreign exchange aspect that is our particular problem.

Is my right hon. Friend aware that in just under a decade the foreign exchange costs of the British Army of the Rhine have increased tenfold? Does he believe that it is an appropriate way of sharing the burden of the Alliance that the member country with the largest balance of payment deficit should pay £500 million across the exchange to the member country with the largest balance of payments surplus?

My hon. Friend has put the position very clearly. Our special problem is foreign exchange costs, which will be the basis of any settlement that, I hope, will be forthcoming.

asked the Secretary of State for Defence what is his policy on the issue of free travel warrants to Service personnel.

The issue of free travel warrants to Service personnel is a longstanding entitlement which, as far as leave travel is concerned, was reaffirmed in the 1969 report of the National Prices and Incomes Board. We have no plans to change the current entitlement.

I thank the Minister for that reply. Does he accept that it would have an adverse effect on Service morale if at any time in future free travel warrants were to be withdrawn, or even taxed?

I am sure that the hon. Gentleman is aware of the impact of the Finance (No. 2) Act 1975 on the question whether warrants should be subject to tax. Discussions are continuing with the Inland Revenue. I take the hon. Gentleman's point.

asked the Secretary of State for Defence if he will appoint a committee of inquiry to examine his Department's management of its housing stock.

No, Sir. I am satisfied that steps are being taken to dispose of surplus accommodation as rapidly as possible.

Will the hon Gentleman reconsider his reply, in view of a number of disturbing facts that have emerged in response to questions that I have put to him in recent months? Does he agree that it is deplorable that it should be regarded as normal for 13 per cent. of Ministry of Defence houses to be empty at any given time? Does he further agree that it is an affront to the homeless that a number of the houses have been empty, on his admission, for over four years and that local inhabitants, whom I tend to believe, say that they have been empty for as long as eight years?

I think that my hon. Friend is slightly misinformed. It is right that 13 per cent. of the stock is vacant at present, but that is not considered normal. We consider about half that proportion to be adequate for normal management requirements. My hon. Friend is right to suggest that some MoD properties have been lying vacant for many years, but our problem is that some are in isolated situations and it is difficult to find purchasers for them, whether private individuals or local authorities.

Does the hon. Gentleman agree that the way in which a small number of Service careers are ended by furniture being dumped on the street is nothing less than a scandal? I appreciate recent reassurances that only Ministers will give orders to take such action, but does the Minister accept that the only real way of dealing satisfactorily with the problem is to ensure that the local authorities of origin accept their responsibilities for families who come from their areas?

I have no difficulty in accepting the last part of the hon. Gentleman's question. One difficulty is that sometimes a hiring has been taken over by the Ministry to meet a short-term shortage, and the owner of the hiring may want vacant possession, to which he may be legally entitled. In those circumstances there is no alternative, unfortunately, but to ask the people who are in the property to leave. I recognise the difficulty in these cases. If the hon. Gentleman knows of any particular cases, I shall be happy to look into them.

asked the Secretary of State for Defence when he next proposes to meet NATO Defence Ministers.

asked the Secretary of State for Defence when he next expects to meet the Secretary-General of NATO.

I expect, as usual, to meet the Secretary-General and my colleagues at the NATO ministerial meetings. The dates for the next meetings have not yet been fixed, but I hope it will be possible for one to be arranged next month.

In view of the warnings from the Secretary-General of NATO, General Haig, and now this week from Vice-President Mondale, that the position of NATO in relation to the Warsaw Pact is weakening and that the Allies must pull their weight in the Alliance, will the right hon. Gentleman take the opportunity at his next meeting with the Defence Ministers to assure them that Britain will play its full part in defending the West, even if that means reversing the three defence cuts of 1976?

The next meeting, which I hope will be arranged next month, will be arranged at my request because I want the Alliance to come to an early decision about the most urgent military requirement, namely, to have an airborne early warning system against the possibility of surprise attack. The fact that we have taken the lead in this matter is an indication of the contribution that we are making to the Alliance.

asked the Secretary of State for Defence when he last met the Defence Ministers of the other member countries of NATO.

I have nothing to add to the answer that I gave to the hon. Member for Macclesfield (Mr. Winterton) on 13th December, except that I met Herr Leber yesterday.

Should the right hon. Gentleman not take early measures to meet these defence Ministers in view of the statement made by the Vice President of the United States in which he was reported to say that President Carter is

"committed to the NATO Alliance"—

Reading.

I am reading President Carter's words—

"and wants to make it a more effective fighting force and deterrent in the face of continuing growth in Soviet military power".

Order. The hon. Gentleman was not here when I pulled up another hon. Member for quoting at Question Time.

I apologise, Mr. Speaker. I hope that I have made it clear to the right hon. Gentleman that President Carter is on record as saying that he wants to make the NATO Alliance a more effective fighting force and a deterrent, in view of increasing Soviet armaments. The President has also said that he is anxious to help with investment if the European Governments are prepared to follow him. Is the right hon. Gentleman prepared to follow the United States President, and will he tell the Defence Ministers so?

I take every opportunity of meeting my colleagues in NATO. I think the question was directed at a collective meeting of the Defence Ministers. I shall certainly wish to renew my acquaintance with Dr. Brown at the earliest opportunity, but since he has been in office for only five days it has beeen a little difficult to see him so far. I remind Opposition Members that, as I recollect, President Carter also talked about substantial economies in his defence budget.

When my right hon. Friend meets his fellow Defence Ministers in NATO, will he urge that they do not lightly reject the proposition from the Soviet bloc that members of the NATO Alliance and Warsaw Pact should sign an international agreement that no nation will be the first to use the nuclear weapon? Is my right hon. Friend aware that this has created some interest in this country and that many people entirely reject the notion that we should use this weapon as a first strike? To reject the proposition entirely would be a great propaganda victory for the Soviet Union.

I do not know whether my hon. Friend was present when I answered my hon. Friend the Member for Salford, East (Mr. Allaun). This is not a new proposition. As I said, it would not be right to enter into a categorical commitment of that kind, because it is necessary for NATO to retain its option, although there is no question whatever of NATO initiating any aggression against the Warsaw Pact or anyone else.

Bearing in mind that reducing the impact of air attack upon the civilian population increases the strength of a country's defence posture, will the Minister ask his ministerial counterparts when he meets them why the Soviet Union is devoting so much attention to building large underground shelters, why the Chinese are doing the same, and what is the lesson for this country and its Western allies?

These questions are under study within NATO. To a limited extent arrangements are made in the NATO infrastructure programme for such provision, for example in airfields and other key installations.

Does my right hon. Friend agree that if we were to sign an agreement not to be the first to use nuclear weapons we would have to strengthen our conventional forces to such an extent that my hon. Friends would turn pale at the prospect of what they would have to pay?

It is important that NATO should retain a substantial conventional capability, but at the same time it is necessary in present circumstances for the three levels of defence forces—conventional, theatre nuclear and strategic nuclear—to be retained. The proper way to get disarmament is by international agreement on the lines that the United States Administration is pressing in SALT and that NATO is seeking to achieve in the mutual balanced force reductions negotiations in Vienna.

Is the Secretary of State aware that on 8th December he lent his name to a defence communiqué on behalf of the NATO Defence Ministers to the effect that the Ministers, including himself, concluded from that meeting that there was a need for real annual increases in defence expenditure by allied Governments? Within one week the right hon. Gentleman was at the Dispatch Box announcing cuts. Whom does he think he is fooling?

I know that the hon. Gentleman is taking a great interest in and studying defence. He should read the communiqués that have been issued over a number of years and recall that Conservative Ministers put their names to communiqués in which it was said that there was a need for 60 divisions in NATO although we are nowhere near getting them. We would all like to increase the strength of NATO. As a collective defence organisation it is growing in strength every year, not least from the improved equipment that is available, and we are playing our part by modernising our forces.

The Secretary of State failed to answer the question asked by my hon. Friend the Member for Shoreham (Mr. Luce). Will the right hon. Gentleman give our NATO partners through the Secretary-General, a cast-iron guarantee that we shall not have any more cuts in our level of contribution to NATO without balanced force reductions with the Soviet bloc?

I have made clear that it is our intention to sustain our contribution. A good deal of misunderstanding takes place because, as the House expects we quite properly give all our figures on a basis of constant prices, while Supplementary Estimates take care of wage and other price increases during the year. But a lot of the figures of other countries are given just at the current rate and there are no adjustments during the year.

This is an area where we are naturally not doing as much as we should like, but we are still making a substantial contribution to NATO. Talk of an absolute guarantee, cast iron and all the rest, is not the kind of language that serious and responsible people can take on board.

Will my right hon. Friend find time to have talks with the new Secretary for Defence of the American Administration to see whether they can jointly fulfil President Carter's inauguration pledge to do all that he can to rid this planet of nuclear weapons?

I very much welcome President Carter's firm commitment to the Alliance, which we heard about today. Along with my hon. Friend I very much hope that the new Administration, both in the SALT talks and in Vienna, will give a new impetus to arms limitation and disarmament. That is the way to deal with the very serious problem to which my hon. Friend drew attention.

asked the Secretary of State for Defence if he will make a statement on defence lands in view of his new proposals for defence expenditure; and if he envisages any further selling up of land proposed for release by the Nugent Committee on Defence Lands.

It remains our policy to retain only land needed for defence purposes and to dispose of surplus property.

About 17,000 acres of the 22,500 acres that the Government agreed should be disposed of, following the report of the Defence Lands Committee, have been passed to the Property Services Agency and are in the course of disposal.

I thank the Minister for that reply, but does he appreciate that many environmental groups are still disappointed at the rate of progress in the disposal of surplus Service lands?

It is fair to say that environmental groups will always be disappointed at the rate at which we dispose of our land. Nevertheless, since 1st April 1972, Ministry of Defence land holdings have been reduced by about 31,000 acres. A further 20,000 acres are with the Property Services Agency for disposal.

asked the Secretary of State for Defence if he will make a statement on his Department's policy on the sale of armaments to Iran.

asked the Secretary of State for Defence if he will make a statement on his policy regarding arms sales to countries outwith the NATO Alliance.

It is Government policy to consider sales of defence equipment to particular countries in the light of all the political, military, security and financial factors involved and our obligations to our allies.

Is my right hon. Friend aware that the continued and planned sales of such massive quantities of armaments to a Government such as this sadly strengthens our image in the world as a purveyor of armaments to any and every military dictatorship? Does my right hon. Friend agree that this quantity of armaments disturbs the balance of military power in that part of the world and stimulates even greater purchases of armaments by other poverty-stricken Governments in that part of the world, to the detriment of their peoples?

I cannot accept my hon. Friend's first premise, that the Government supply arms to any and every military dictatorship. I am sure that my hon. Friend will be aware that this country fully observes its commitments under the United Nations embargo covering the sale of arms to both Chile and the Republic of South Africa.

My hon. Friend raised some wider questions. I have considerable sympathy with his view that we would all prefer less developed countries—and, in fact, developed countries—to spend less of their national wealth on armaments and more on goods that are of more peaceful use to their inhabitants.

As my hon. Friend will be aware, President Carter only yesterday said that Vice-President Mondale will be discussing arms sales on his trip to Europe. It would be premature of me to comment any further at this stage.

I accept my right hon. Friend's last remark that it would be premature to comment, but can he assure us that the approach from Vice-President Mondale, resulting from President Carter's statement that he intends to give priority abroad to the sale of arms to third world countries, will receive a sympathetic response from the Government?

It is not for me, without notice, to commit the Prime Minister but I should be very surprised if my right hon. Friend did not receive all Vice-President Mondale's constructive suggestions with a hearty welcome.

Surely the only criteria to be applied in these cases is the immediate security of the United Kingdom. Is it not the case that the refusal of arms sales to countries for doctrinaire reasons, regardless of what the United Nations may say, damages employment prospects for many of those in the industries concerned?

It is true that if the arms trade were to cease there would be employment consequences in the short run for this and every other arms-producing country. On the other hand, those countries would have more money to spend on other things to which one would hope that the firms producing armaments would be able to switch their production.

asked the Secretary of State for Defence if he will make a statement on the development of sales of arms by Great Britain to countries in the Third World over the past decade.

The total value of defence exports from the United Kingdom has in current prices risen from about £150 million in 1966–67 to an estimated £700 million in 1976–77. It has been the policy of successive Governments not to give details of sales of defence equipment to specific countries or groupings of countries.

Is it not appalling that when the people of the Third World are so desperately poor and in need of the means of production we should specifically promote to them the means of destruction? If we accept the economic arguments pure and simple, are we not in the same position as the people who would sell arms to gangsters and terrorists?

As my hon. Friend is aware, it is the right of every sovereign State to buy armaments for its defence. I share my hon. Friend's concern that so many less-developed countries see fit to spend a proportion of their exiguous wealth on armaments rather than on more productive goods for the benefit of their inhabitants.

Could the Minister persuade the East European and Communist bloc countries to do a little less exporting of arms? For example, fewer Czech rifles in Ulster might be conducive to greater peace within the United Kingdom.

We should all welcome a reduction in the arms trade, in whichever direction.

Will my hon. Friend confirm that one-third of the £700 million to which he referred is accounted for by arms purchased by Iran? Is he aware that at a recent congressional hearing it was said that Iran had more tanks, more aircraft and more helicopters than any other country outside the two super Powers? Is it in the interests of stability in that region for such an enormous military super Power to emerge there?

One consideration that Her Majesty's Government take into account in approving arms sales to any country is whether the arms would serious jeopardise the balance of power between the countries in the area involved.

asked the Prime Minister if he has any plans to pay an official visit to the Channel Islands.

asked the Prime Minister if he will visit the Channel Islands.

I have at present no plans to do so.

Did my right hon. Friend see a recent report in The Sunday Times suggesting that £1,000 million is lost in the financial year to the United Kingdom taxman by tax evasion through the Channel Islands? Did he see a recent report that Spillers—the bread and biscuit group—had raised £11 million on the pretext of investing in new plant and machinery and had used the money to set up a company in the Channel Islands to evade the profit levels set by the Price Commission? Should not these loopholes be closed immediately? In his new rôle as economic supremo, will he not take on the task himself, as the Chancellor has not?

I always look to my hon. Friend for accuracy in these matters, so I must repudiate once again the last part of his supplementary question. Tax avoidance and tax evasion are serious matters. I agree with my hon. Friend that they are not admirable devices and that the persons who carry out evasion or avoidance are not to be admired. My right hon. Friend the Chancellor of the Exchequer is constantly considering the possibility of closing loopholes and has taken several steps in this direction, for example, on capital transfer tax. I shall draw to my right hon. Friend's attention what my hon. Friend says.

In view of the special relationship between the Channel Islands, Britain and the Crown, will my right hon. Friend initiate negotiations with the Governments concerned to try to close the loopholes by which thousands of people and many British companies are dodging British taxes? During those negotiations, will my right hon. Friend also bring forward a matter that I have raised with the Home Office concerning Channel Islands prisoners who are in British gaols? They are separated for long periods from their families and are imprisoned because of the medieval laws which operate in the Channel Islands.

I take note of what my hon. Friend says about discussions with the authorities in the Channel Islands, although the Chancellor of the Exchequer is free to take what legislative action he thinks right. My recollection, from a former office I held, is that as the Channel Islands have few facilities for holding prisoners we offer them facilities from time to time. I shall bring the matter to the attention of the Home Secretary.

Does the right hon. Gentleman recall that, although his hon. Friend the Member for Bolsover (Mr. Skinner) today asked a supplementary question about the Channel Islands, where the level of unemployment is about 2 per cent., this time five years ago he was busy disrupting Question Time in the House of Commons because the then announced level of unemployment was unacceptably high, although it was two-thirds of the level of unemployment announced today. Does the right hon. Gentleman accept that the figures announced today illustrate the failure of all his economic policies and demonstrate once again that the Labour Party is the natural party of unemployment?

I can only admire the humbug of hon. Members who cheer that question, when I recall that the policies they have been pressing upon the Government would at least double the present level of unemployment. As for the nature of the problem, I agree with the right hon. Lady that the total is not one that should be tolerated. But I repeat what I have often told the House, that I do not think it is possible that the figure will be reduced for some time. As long as we are trying to squeeze inflation out of the economy, this is unfortunately one of the consequences that we must face. However, the right hon. Lady should assist in these matters by explaining to the country that if we are to overcome inflation difficult measures must be taken. The Government intend to continue to take them.

The fact is that it is the Labour Government's refusal to take the appropriate measures earlier that has led to large unemployment now. Is the Prime Minister aware that he may run away from responsibility but he cannot run away from the facts?

I have no intention of running away from the facts. The right hon. Lady shares considerable responsibility for the present level of unemployment.

Rubbish.

The right hon. Lady was a member of the Administration which allowed the M3 figure to rise to unprecedentedly high levels. That has been working its way through the economy for some years. The right hon. Lady knows it. That figure has now been reduced. It is coming down fast. That is why we can look forward with some confidence to a considerable improvement in our economic prospects, to increasing exports, to a better balance of payments position, and to the regeneration of British industry. All that will lead to more employment.

Without in any way indulging in the humbug we hear from the Opposition Benches, may I say that my right hon. Friend must be aware that on the Labour Benches and in the Labour Party in the country there is a deep and growing concern about the level of unemployment? When will the Cabinet get down to dealing with the question of unemployment by introducing, for example, public works schemes, policies of import substitution and much else? We cannot tolerate the present level of unemployment for much longer.

My hon. Friend is right in saying that genuine concern about the matter is felt throughout the country. The Cabinet and I certainly share that concern and feel it very deeply. A number of measures have been introduced, such as the youth employment subsidy, the job creation scheme, work experience projects and schemes for apprenticeships. All these have helped. I was looking at the figures the other day, It is reckoned that during this year such measures will assist about 200,000 young people. I cannot promise my hon. Friend the party, the House or the country that unemployment will be substantially reduced, whatever palliatives are introduced during the next few months. I cannot avoid saying that. It must be understood. I ask the country to have patience. The economic situation is steadily improving, and the improvement will continue.

Was not the February 1974 election fought on the slogan "Back to work with Labour" and was not the October election of that year fought on the basis that the Labour Government had got unemployment moving down? Therefore, why does the Prime Minister have the humbug to try to cast the blame on to someone else?

What I did was to suggest that, as the right hon. Gentleman knows, his right hon. Friend the Leader of the Opposition should share the responsibility. I did not cast it off on to her; I said that she should share it, and she should. So should the right hon. Gentleman, because he was a member of the same Administration. It is true that the February 1974 election was fought on the slogan "Back to work with Labour", and within a matter of days my right hon. Friend the then Secretary of State for Employment—the right hon. Member for Ebbw Vale (Mr. Foot)—had got the miners back to work.

asked the Prime Minister when he next intends meeting the Defence Chiefs of Staff.

If the House will permit me, I should like to express my deep regret at the news of the death yesterday of the Chief of the Defence Staff, Sir Andrew Humphrey. The answer to the hon. Member's Question is that I see the Chiefs of Staff from time to time in the course of normal Government business.

The whole House will wish to be associated with the Prime Minister's remarks, in view of the tragic death of the Chief of the Defence Staff yesterday.

Will the right hon. Gentleman take this opportunity to pay tribute not only to that distinguished officer but to all other holders of the office and to reaffirm that his Government—indeed, any Government —regard their prime duty as the defence of the realm?

Yes, Sir. That is certainly my very strong view, but the matter must also be seen in conjunction with our relations with our NATO Allies. None of us is an island unto himself in these days. I should like to repeat the view expressed by Chancellor Schmidt yesterday that although the build-up of Soviet arms is a matter for concern it may be that in the future the Soviet Union will attain parity in strategic nuclear weapons and tactical nuclear weapons. The Soviet Union exceeds us in conventional weapons, but it would be wrong to panic, because at present the balance is still maintained, and I believe that the security of the West is still in good shape.

When my right hon. Friend meets the Chiefs of Staff will he explain to them that over the past three years our defence commitments overseas, especially in Western Germany, were equal to the loan that we have just had to obtain from the International Monetary Fund, with all its conditions, and that over the next 12 months the balance of payments cost of our military commitments overseas could rise to £1,000 million? In the light of his efforts to try to secure an offset agreement, which have failed, will my right hon. Friend also tell the Chiefs of Staff that we can no longer afford the economic burden of military commitments overseas?

I believe that that would unnecessarily weaken the defence of the United Kingdom. The presence of British troops in Central Europe as they are today is not only a source of stability to Central Europe but a means of an extended protection of our own islands. Therefore, I cannot accept what my hon. Friend says.

On behalf of my right hon. Friend the Leader of the Opposition and my other right hon. and hon. Friends, I should like to express the same regret as the Prime Minister has expressed about the death of the Chief of the Defence Staff, who was a very brave, very distinguished and very able officer.

The Prime Minister said that there was no need to panic about the Soviet defence forces. We are not talking about panic but Vice-President Mondale said yesterday that America would build up her NATO forces provided her European Allies were prepared to do the same. Will the Prime Minister now assure the House that lie is prepared to match America's resolve?

I shall certainly want to discuss the matter with Vice-President Mondale when he arrives, because I wonder how it would be reconciled with the proposals to reach a new strategic arms limitation agreement with the Soviet Union, which I assume would have the effect of reducing expenditure—I trust that it would—and with the need, as I see it, to try to put some fresh life into the negotiations on mutual balanced force reductions that have hung fire for two years in Vienna. This seems to me the better course for us to follow, because it is the view of a number of us in the NATO Alliance—not merely myself; I know that Chancellor Schmidt shares this view—that the strain of the Soviet Union's present build-up of arms, in terms of its economic strength, must be considerable, and both of us should seek to relieve ourselves of these strains.

asked the Prime Minister if he will pay an official visit to Moscow.

I have at present no plans to do so.

Nevertheless, does the Prime Minister recall the Helsinki Agreement, when the Russians agreed to limit their arms build-up and to increase the freedoms of their citizens? When will the right hon. Gentleman publicly rebuke them for having done the reverse in both cases, as he has just admitted?

I leave public rebukes to the hon. Gentleman. In my view, that is not the best way of dealing with the Soviet Union in these matters. [An HON. MEMBER: "Yes, it is."] That is a difference of opinion. As far as I can see, the Opposition's policy on these matters in relation to the Soviet Union seems to be to cut off trade, to have an arms race and to reduce political contacts to a minimum. I do not believe that any of that makes sense.

In the formal or informal contacts that his Administration will be having with the Russians in the run-up to the Belgrade Conference, will my right hon. Friend tell them that they should not be misled by certain Right-wing circles' misuse of Russian dissidents who have recently left the Soviet Union into feeling that there is not deep discontent and disenchantment in this country at the continuing persecution of dissidents in the Soviet Union?

I believe that that is well understood by the Soviet leadership. Although some Members of the Opposition believed that we yielded up more than the Russians in the Helsinki Agreement, I believe that the reverse is the case. It will be much more difficult for the Soviet Union to live up to its undertakings in relation to Basket III than it is for the West to fulfil its undertakings under the Helsinki Agreement. This, of course, will be a matter for serious discussion when we go to Belgrade.

Is the right hon. Gentleman aware that the whole nation will regret the loss of the Chief of the Defence Staff—a fine airman and a loyal servant of his country—and that the House will wish to convey its sympathy to Lady Humphrey?

What did the right hon. Gentleman mean in his television broadcast last night with the Federal German Chancellor, when he declared that building up armaments must be as much a strain on the Soviet Union as it is on us, bearing in mind that the Soviet Union is spending three times the NATO average on defence and that Britain is unilaterally reducing its defence expenditure? What did he have in mind?

If the hon. Member's figures are correct—I do not know that they are—and the Soviet Union is spending three times as much as we are, I should have thought that it followed automatically that the strain would be three times as great.

If my right hon. Friend does have contacts with people in the Soviet Union or Czechoslovakia, will he make it clear to them that many of us on the Government Benches who are proud to proclaim Left-wing and Socialist ideas utterly deplore the treatment meted out to the signatories of Charter 77 in Czechoslovakia, as well as to Soviet dissidents?

I was asked a question about this matter last week and I should be very happy to repeat at any time what I said then.

With permission, Mr. Speaker, I will make a statement about the visit of the Chancellor of the Federal Republic of Germany from 23rd to 24th January. This was one of the series of regular six-monthly visits between the British and German Heads of Government.

Chancellor Schmidt was accompanied by Herr Genscher, Vice-Chancellor and Federal Minister of Foreign Affairs, Dr. Apel, Federal Minister of Finance, Dr. Friderichs, Federal Minister of the Economy, and Herr Leber, Federal Minister of Defence. On our side the Chancellor of the Exchequer, the Foreign and Commonwealth Secretary, the Secretary of State for Energy and the Secretary of State for Defence took part. We began with a general discussion among all Ministers followed by a series of bilateral talks and then we came together again for a final session. This pattern worked well, and the Federal Chancellor and I agreed to repeat it at our next meeting.

The talks covered a wide range of international and Anglo-German bilateral matters. I expressed to the Chancellor the appreciation of Her Majesty's Government for the support which the Federal Government have given us in recent weeks in connection with the IMF loan and the "safety net", both of which have contributed greatly to more stable conditions in the international money markets.

Much of our talks was concerned with the present world recession and how we should approach the series of international meetings which are in prospect over the next few months. We were agreed that a properly prepared meeting of leading industrialised countries would be helpful in co-ordinating our policies for bringing the world out of recession.

Britain's prospects for recovery in 1977 are based on growing exports and I emphasised the importance we attach to continuing expansion in the economies of the world, including those of the United States, the Federal Republic of Germany and Japan, as a means of generating greater expansion and more employment in the rest of the world.

We reviewed the present position of the negotiations between the industrialised countries and the developing countries in the Conference on International Economic Co-operation. We also discussed our relations with the Soviet Union and the preparations for the talks that will take place in Belgrade this summer to follow up the agreements reached at Helsinki.

On defence matters, we welcome the declared intention of President Carter and of the Soviet Union to seek a new agreement on strategic arms limitation and agreed that the Vienna negotiations on reducing conventional arms should be given a new impetus.

We did not attempt to reach a final agreement on the question of offsetting the cost of stationing our troops in Ger- many, on which our two Governments hold different positions. The Federal Chancellor pointed out that similar arrangements with the United States had already been brought to an end. Our discussions will continue and we are both confident that we shall with time reach a conclusion on this matter.

Our joint interests with the Federal Republic of Germany cover many areas —in the European Community, in NATO and more recently in the Security Council of the United Nations. I am glad to report that in all these fields our relations are close and in good repair.

I am grateful to the Prime Minister for his courtesy in always reporting to the House the results of these conversations. However, we should like the reports to be a little more informative sometimes. I should like to ask the right hon. Gentleman three questions. The first is about defence. He says that he has not reached or attempted to reach a final agreement on offsetting costs, yet the last one expired in March 1976. Will he undertake to have no reduction in our forces in BAOR except in the context of a mutual and balanced force reduction agreement in the meantime?

Second, as the right hon. Gentleman has discussed the economic position with the Federal Chancellor, may I ask whether he discussed with him why our own index of industrial production has risen by only 3 per cent. over the last year, while Germany's has risen by 9 per cent., that of the United Sates by about 8 per cent. and Japan's by about 11 per cent? There is expansion in the world but we are not getting it here. Did the Prime Minister discuss why our performance is so much worse than theirs?

Third, what did the right hon. Gentleman say to the Federal Chancellor about the prospects of direct elections here?

I would wish to be as informative to the House as possible, but when there are joint discussions with other Heads of Government there has to be a certain reticence in what is said afterwards. However, I shall bear in mind what the right hon. Lady says.

As for the reduction in our forces in Germany, as a matter of policy it is certainly not the Government's desire to reduce such forces, for the reasons that I gave in an answer just now. We also have treaty obligations on this matter which are well understood and which were entered into by the Earl of Avon many years ago. There is, therefore, no intention of reducing our forces pending any discussions or agreements on mutual balanced force reductions in Vienna.

I do not think that the right hon. Lady will expect me to give a short and concise answer to her question about why the United States and the Federal Republic have done better. One reason which certainly stands out is that their expansion has been export-led. That is certainly true of the Federal Republic and of Japan. That is why it seems to us that some expansion in the internal German economy might help to increase exports elsewhere. As I said earlier today, it is our intention now, and we are working on it—this is one of the reasons why we cannot have domestic reflation—that exports should be in the lead for our recovery, too, so that it is soundly based. That means having to withstand a great deal of pressure for easy reflation, which would be simple to do but would upset and offset many of the things that we should be tackling.

As for direct elections, we discussed Community matters but we did not discuss that matter in particular. However, the Government's intention still stands.

In discussing with the Federal Chancellor the relative success of the German economy, was the Prime Minister able to make any assessment of the contribution to it which has been made by the system of industrial partnership which we ourselves, as an occupying Power, helped to introduce into Germany at the end of the last war? If so, does not the right hon. Gentleman now regret that the terms of reference and membership of the Bullock Committee were so rigged as to produce such an unsatisfactory report as we shall all receive officially tomorrow?

Yes, we had some discussion about industrial democracy or industrial partnership, because it has had considerable success in the Federal Republic—as I believe it will have here.

As regards the Bullock Report, there is no point at this stage in jobbing back to the terms of reference. I have never seen a report that has been so criticised, attacked and described prior to its publication. Perhaps the right hon. Gentleman will be kind enough to read it first—or he may have already done so —before he asks me further questions.

Will the Prime Minister reveal how much offset the German Chancellor is prepared to offer to this country against the £500 million a year that we are spending across the exchanges on BAOR? Has not this drain continued year after year? If West Germany will not pay up, why cannot we do as the French have done and reduce by 10,000 the 55,000 men we have in Germany?

No, Sir, I cannot reveal how much the German Chancellor has offered, because we have not yet reached the stage of discussing figures. The position of the German Government is clear. They wish to bring the matter to an end because they feel that certain political taints are attached to this occupation which they very much resent. I understand that attitude, as I am sure we all do.

On the subject of whether we should follow the action taken by the French, I must remind my hon. Friend that the French have never had an offset agreement and have never secured any payments from the Federal Republic for these costs but have borne them year after year. Therefore, there is a big difference between their situation and ours. They do not have a duty that requires them to maintain a certain number of troops, whereas we do.

Did the Prime Minister discuss with the German Chancellor the arrangements and procedures for "crisis control" within NATO? I am referring to the prevention of war rather than the situation that exists after the outbreak of war. Is the Prime Minister aware that General Alexander Haig recently said that he was not satisfied with the security of communications or with "crisis control"?

I did not discuss that matter with the German Chancellor, but our Ministers of Defence had discussions. Perhaps the hon. and gallant Gentleman will table a Question on that topic to my right hon. Friend the Secretary of State for Defence.

In view of the underlying improvement in our balance of payments situation and the fact that we are now supported by massive loans, does not my right hon. Friend feel it possible to ask the German Chancellor whether Britain could reduce its minimum lending rate by a further 2 per cent. to prevent the crippling of investment by local or central authorities in this country?

That is an ingenious supplementary question, but we did not discuss either minimum lending rates or base rates. I am sure that my hon. Friend was pleased to see that base rate was reduced today by 1 per cent. I trust that that will be the beginning of a trend. There is no doubt that last year interest rates hampered industrial development, especially in small businesses. It is Government policy as soon as it is prudent to do so to see that interest rates are reduced.

Is it not clear that the Prime Minister did not find time yesterday to discuss with the German Chancellor the subject of direct elections to the European Assembly, which are likely to take place in other European countries in May or June next year? Will the right hon. Gentleman undertake to introduce the Bill providing for direct elections sufficiently early in the present Session to give it a reasonable chance to get through Parliament?

That proposal was in the Queen's Speech, and the Cabinet is now considering when a Bill should be introduced.

Will my right hon. Friend say whether he was able to take any initiative in talks on the reprocessing of nuclear fuels? Does he feel that we are any nearer to agreement with Germany in a joint European approach to President Carter, not only on the centralisation of reprocessing plants but on the subject of the international transportation of nuclear materials? Does he not think that a European initiative with President Carter is now possible?

We had some discussions on the processing and commercial arrangements in respect of nuclear fuels, which is a most important matter. My hon. Friend is correct to focus on the problems and dangers that can be associated with them. Our policies and those of the Federal Republic are close in these matters, but we did not discuss the particular problem of the internationalising of transport arrangements or of centralising them. My hon. Friend can take it that there will be serious discussions with the new United States Administration so that we can achieve a concerted policy.

Did the Prime Minister discuss with the West German Chancellor the situation in the Middle East? Bearing in mind that for many years there has not been a better opportunity than now exists to achieve a settlement, should not Western Europe be playing a much more active role in achieving that settlement? If no settlement is reached and another war results, will not Western Europe suffer more than anybody else, apart from the confrontation countries?

The last part of the hon. Gentleman's supplementary question is very much in our minds as to the dangers that might arise from any inability to settle the Middle East situation. We discussed what possible helpful steps might be taken by the Community or any one member of it. I prefer not to go into any further detail now.

Did the subject of our mutual images of each other arise in the discussions? Does my right hon. Friend share the concern of the West German Government and population concerning the daily diet of war films served up on our television screens? If so, will my right hon. Friend use all his influence to ensure that a proper realistic image of today's Germany comes across to our population?

This matter arose only in the course of the television discussion involving the German Chancellor. The Chancellor did not raise the matter with me as a subject of high policy. He expressed on television last night the irritation felt in Germany about some of these films. I tried to explain that we have repeats of old films and of old trends. I am told that the trend on television at the moment is towards the 1920s—and I think that I can certainly qualify on that score. These matters go round in circles. I hope that the German Chancellor has not taken the matter too seriously, because it does not represent the underlying attitude of the British people.

rose

Order. There is another major statement to follow, together with other business. Therefore, I shall call two further speakers from each side. I call Mr. Crouch.

May I congratulate the Prime Minister on what appears to be a good relationship with the German Federal Chancellor? Will he use that growing friendship to persuade the Chancellor to receive people from this country, principally trade unionists and employers, to explain to them the basis of industrial democracy as practised in Germany, which is one of co-operation and does not involve handing over control to one side or the other?

I am obliged to the hon. Gentleman for his congratulations. There was such a meeting last July between the Federal German Chancellor and members of the Bullock Committee, including those who signed both the majority and the minority reports. I accept that the principle of industrial democracy, if it is to be permanently based, must arise from agreement between both sides. I shall be striving for such a principle in whatever discussions follow the Bullock Report.

From what my right hon. Friend said, it would appear that the Federal German Chancellor was somewhat upset at the raising of the question of offset costs. When my right hon. Friend next meets the Chancellor, will he remind him that last year the German Government came to a good agreement with the Americans concerning United States forces stationed in Germany and that if matters go that far with us we shall have no quarrel with the Chancellor?

The Chancellor was not upset. He explained his position and I explained ours. As I recollect it, the agreement with the Americans last year was a final and conclusive agreement on the sum of $61 million. I am not able yet to say whether that would be a satisfactory ending to the problem as far as we are concerned.

As the balance of trade deficit of about £460 million in 1976 with Japan has led to talks with the Japanese in which they have been asked to restrict exports from that country, and as there is a balance of payments deficit amounting to some £900 million with the Germans, is the Prime Minister following the logic of the Japanese situation and asking the Germans to restrict their exports?

The logic of that situation would demand that the Japanese were as open to receive our exports as are the Germans. This is a serious matter. I take the view that the expansion of the internal German economy would be one way in which we could hope to improve our exporting prospects. I pressed that view on the Chancellor.

Did the Federal Chancellor express any curiosity about our country's constitutional problems, especially when he has 17 million Bavarians and Franz Josef Strauss? Did he comment on the demand of nationalist Members on the Opposition Benches in this House and of my hon. Friend the Member for South Ayrshire (Mr. Sillars) for separate Scottish seats in the Council of Ministers and on the Commission?

We did not discuss these particular matters but, in view of my hon. Friend's concern about it, if the Chancellor raises the issue at a future date I will unleash my hon. Friend upon him—and God help both of them.

With your permission, Mr. Speaker, I wish to make a statement about Rhodesia.

As I told the House on 14th December, I authorised Mr. Richard to adjourn the Geneva Conference and to undertake intensive consultations in Southern Africa with a view to laying the foundations for an agreement on an interim Government. In particular, I asked him to develop with the parties some new and positive ideas, including our ideas on the direct rôle which Britain would be read to play in the transitional period.

Following Mr. Richard's first round of consultations, we set out what we had in mind in a document, copies of which have been placed in the Library. This document was given to each of the Geneva delegations, the four African front-line Presidents and Mr. Vorster.

The suggestions in the paper did not constitute a cut-and-dried British plan. Nor were they presented on a take-it-or-leave-it basis. They were intended to provide a serious and detailed basis for negotiations and were open to amendment and modification in the light of those negotiations.

But in our view these proposals represented a reasonable way forward. They were designed to meet the concern of the nationalists that the transfer to majority rule should be rapid and irreversible, and of the white Rhodesians that it should be peaceful and orderly. They would have led to the ending of the war and the lifting of economic sanctions. They were supported by the American Government, and would have set the stage for an international trust fund to help develop the Rhodesian economy and give financial reassurances to Rhodesian Europeans. They would have provided a basis for a prosperous, independent and non-racial Rhodesia.

It was, therefore, with a deep sense of disappointment that we learnt yesterday that Mr. Smith, alone of the parties, had rejected the ideas which we had put to him, even as a basis for further negotiation. Mr. Smith claims to have left the door open for further negotiations by ex-pressing his readiness to implement the five points put to him by Dr. Kissinger in September last year. But it was clear from an early stage of the Geneva Conference that the nationalist delegations could not agree to accept these proposals as a basis for negotiation. That was why we put forward our own ideas, which, we believed, offered a reasonable way of bridging the gap between the parties.

Mr. Smith has claimed that our proposals would have led to chaos and Marxist rule. But if there is such a risk, it is much more likely to be created by his rejection of these proposals. He has once more shown his inability to face reality.

We have to accept that this present round of discussions is at an end. We now need—all of us—to take stock and to make a cool appraisal of the new situation. I have instructed Mr. Richard to remain in Southern Afria for a few more days to disuss these latest developments with some of the parties. He will then return and report to me with a full assessment of the attitudes and expectations of those concerned.

Yesterday's events represent a serious setback to all our hopes for peace in Rhodesia. We must now give intensive study to any options which may still remain open to us in this new situation, for our goal remains a peaceful and orderly transfer to majority rule in Rhodesia.

Does the Secretary of State realise the deep sense of misgiving with which his statement has been heard by the House? Is he aware that the very important document to which his statement referred was not available in the Library until 3.25 p.m.? This gave us very little opportunity to study this lengthy and complicated document.

Is the right hon. Gentleman aware that our growing anxiety about the events has been matched by the discretion with which we have endeavoured to treat the problems we all face? I must tell him and ask him to recognise that we on this side of the House feel that the Government's handling of these matters has been both dilatory and ineffective. We think that a unique opportunity was offered by the Kissinger initiative, and we believe that the inconclusive nature of the Geneva Conference and the apparently inadequate authority given to the principal spokesman for this country in these matters has led very much to the situation we face today.

We are deeply disturbed at the way in which the statement simply discards the original basis of the Kissinger negotiations. After all, that basis embodied what constituted a great breakthrough—the acceptance within a reasonable time of majority rule, coupled with major safeguards for all Rhodesians, black and white.

Can the Foreign Secretary tell the House what he proposes to do next? A cool reappraisal does not seem to us to meet the needs of the case. Before Christmas he made it clear that in the event of the situation developing in a way which was not satisfactory he would be prepared to visit Africa himself. Is that now his intention? Could he also assure us that the visit of Vice-President Mondale will be used to try to define a line of policy which will bring to an end this terrifying period of uncertainty, with all its implications for Rhodesians and Africans as a whole?

The right hon. Gentleman's first point was that our handling of this matter has been dilatory. But after 11 years of a problem which has baffled both Labour and Conservative Governments alike it would have been absurd to expect a solution in 11 days, or even 11 weeks. It was clear that, whatever happened, the negotiations would be long-drawn-out and extraordinarily complex, and that has turned out to be the case.

As to discarding the Kissinger proposals, I should point out to the House yet again that these were offered only as a basis for discussion, and they were not acceptable to any of the nationalist delegations. There was no question of the British Government discarding them. The notion that there was a Kissinger deal is not on. The only deal which could be made would not be between Dr. Kissinger and Rhodesia, or between the Anglo-Americans and the Rhodesians, but between the white and black Rhodesians. No one else could possibly make a deal.

The right hon. Gentleman's third point was about my going to Africa. A week ago I thought I would go in early February, because it looked as if our proposals would meet with preliminary acceptance from everyone as a basis for negotiation. A week ago I did not expect the sudden rejection by Smith, which has knocked it on the head. What I do now is a matter for discussion after Mr. Richard comes back. Of course the Rhodesian situation is a matter which will be discussed with Vice-President Mondale—the subject will certainly be on the agenda—but it is wrong to expect that we can devise quickly and simply a new approach in a matter of minutes.

Since this is, I believe, the sixth attempt to reach a settlement with Mr. Smith, some of us are not so naive as to think that one merely puts sensible proposals to him and that one then immediately gets a durable settlement. Some of us would wish to pay tribute to the tireless efforts of Mr. Ivor Richard.

Is there not the difficulty, which might be a lesson for the future, that the Kissinger proposals never were a basis for negotiation? To Mr. Smith they were an unamendable set of proposals; to the Africans they were a set of proposals to which they were not a prior negotiating party. Is that not a recipe for disaster?

If Mr. Smith now tries to cobble together a collection of chiefs and tries to call that genuine partnership, should we not bear in mind that the Pearce Commission, which was a totally independent Commission, made it clear that that arrangement would enjoy no credibility among African opinion in Rhodesia? Does the Foreign Secretary agree that Mr. Smith wishes to keep the Marxists out of Rhodesia but that he is going the best way about inviting them in? They will not necessarily be Africans and they will certainly be armed.

I am grateful to the right hon. Gentleman for his opening tribute to Mr. Ivor Richard. I should like to endorse everything he said about Mr. Richard's strong and determined efforts to achieve a settlement. It is clear to me that no one could have done better than he has done in this situation.

I strongly agree that if Mr. Smith attempted to reach some kind of internal settlement with a collection of chiefs, that would carry no credibility outside. No settlement to the Rhodesian problem that does not carry credibility outside has any hope of being durable.

I agree with the right hon. Gentleman's third point that if this is now the final break in negotiations it hugely increases the possibility of Marxists participating in the conflict, and, as the right hon. Gentleman said, they will be armed and not necessarily from Africa.

May I ask my right hon. Friend yet again not to get further involved in the Rhodesian problem? Does he not agree that the Rhodesian question is essentially a matter for the statesmen of Southern Africa, particularly if bloodshed is to avoided? With this end in view, would it not be best for the President of Zambia and the Prime Minister of South Africa once again to convene a conference of all interested parties in order to try for a peaceful settlement? My right hon. Friend will know that many of us have had little faith in the instant diplomacy of Mr. Kissinger and that we believe that Mr. Ivor Richard was given an impossible task.

The temptation not to become involved in Rhodesia is great for almost all hon. Members. There has been no great inter-party difference on this point. The reason why we became involved, first in calling the Geneva Conference, then in chairing it and then in sending Mr. Richard to Africa, was that it became absolutely clear last September and October that unless we were to become involved at that point to this extent no negotiations of any kind would take place. Like the majority of hon. Members, I take the view that we had a moral and constitutional obligation at any rate to get involved to the extent that we have done.

Before the Geneva Conference, Mr. Smith reached agreement with Dr. Kissinger on definite proposals which would bring majority rule within two years. That enormous step forward was warmly welcomed by the British Foreign Office. Did Mr. Richard make any serious attempt to get the agreement of the conference to those proposals? Is it not true that the breakdown of the conference is in no way the fault of Mr. Smith?

One thing at least is certain. It is that the right hon. Gentleman's proposals in this matter over the last few months would have brought the negotiations with Mr. Smith to an end far more quickly than they have ended, because it was only last July that the right hon. Gentleman was advocating a resumption of sovereignty by Britain over Rhodesia. This is something that would have been wholly unacceptable to Mr. Smith.

We have discussed the status of the proposals again and again. What was proposed and accepted, and welcomed by me, was that the proposals should be the basis for subsequent discussions. That was the only basis on which they were accepted, and this has been made clear again and again by Dr. Kissinger and myself.

As to what happened in Geneva, I can assure the right hon. Gentleman that these proposals—the so-called five points—were circulated almost on the first day of the conference and were rejected by the nationalist delegations at the conference. At a later stage in Geneva the conference chairman explicity invited Mr. Smith to present the five points as a subject for discussion and to explain them. He declined to do so.

Is it not now clear that the major obstacle to a settlement in Rhodesia is Smith himself? Is it not also clear that there is no point in further negotiations with that individual? Is it not now important that the British Government should closely concert their future policy with the four front-line Presidents and make the maximum use of international bodies to bring pressure on Smith?

I agree that we must concert any future policies with the frontline Presidents, though not only with them. Others are centrally involved. We should seek to secure, as we have done so far, the maximum degree of support we can from international bodies. In that connection let me mention that the countries of the Community, whenever consulted on our initiatives in the last few months, have given us full and definite backing.

What is the reason, in the opinion of the right hon. Gentleman, why for over 11 years one British Government after another have fallen into a series of gross but predictable and predicted misjudgments over Rhodesia? Is it not time, even now, that we broke out of the dream that we have a moral and constitutional duty to do that which we have no power to do?

The right hon. Gentleman has been consistent in this matter and certainly, particularly in the last few months, has constantly warned the House and me personally that the course we were adopting involved responsibility without power. I was absolutely clear that that was the case and that that was a risk. Nevertheless I, like the majority of the House, thought that it was a risk that any British Government at that moment ought to take, even though there was throughout the possibility of failure.

Will my right hon. Friend consult the new American Administration of President Carter with a view to securing much more effective sanctions and economic pressure designed to bring down the Smith Government?

I have no doubt that all these matters will be discussed with the Vice-President when he visits this country at the end of the week and, subsequently, with President Carter.

Is the Foreign Secretary aware that many of us on the Opposition side think that during the course of the negotiations too much attention has been given to the views of the front-line Presidents, the Patriotic Front and the guerrillas and too little to the views of moderate Rhodesians of all races in that country? Will he now, therefore, consider proposing a referendum in Rhodesia to determine the first black Minister of an interim Government?

Conservative statesmen over the decades have taught us that foreign policy must rest not on pipe dreams but on the brute facts of any given situation. One of the facts in this situation—some people like it, others do not—is that the front-line Presidents and the Patriotic Front exist and that no settlement which does not command their assent has the slightest hope of being durable. That is simply a fact.

As for the referendum, I say "No" if what is meant is an instant and rapid referendum. Most of the black African parties in Rhodesia have been banned there for many years and they have had no opportunity for campaigning or for grass-roots activity. That is why any election, not a referendum, must take place after these parties have had adequate time for campaigning at grass-roots level.

In contradistinction to what was said by the last questioner, does my right hon. Friend agree that Mr. Smith has yet again disappeared down a bolt-hole, not out of respect for moderate opinion of all races but out of fear of his security chiefs and the entrenched hardliners among the white Rhodesians?

Will my right hon. Friend bear in mind that all of us on this side pay tribute to what Mr. Ivor Richard has done, not least the conversations in which he took part in South Africa, because, whether we like it or not, Mr. Vorster may be the only man who can persuade Mr. Smith to come to his senses?

I prefer not to speculate as to the reasons why Mr. Smith broadcast as he did yesterday. My hon. Friend is absolutely right in saying that the South African Government have a key rôle to play. That is a basic fact. If, after Mr. Richard returned home, it seemed that a visit would be helpful, I would have no hesitation in paying it.

Has the Secretary of State considered that both Mr. Smith and the Rhodesians might be less reluctant to accept a direct British rôle during transition to majority rule if the Labour Party had not over the last few years consistently adopted such a hostile and hectoring tone towards them? Since it will be necessary to achieve the agreement of the whole white population if there is to be peaceful transition to majority rule, will the Secretary of State do his best to see that that attitude is altered in future?

Mr. Smith's régime has for the past 11 years been an illegal one, and illegal régimes justify a certain amount of hostility.

Does my right hon. Friend recognise that we on this side endorse the efforts that have been made by the Government to bring about peaceful transition to majority rule, and that there is overwhelming support for Mr. Richard's efforts? Does he agree that blame for the failure of the discussions must be fairly and squarely placed upon Mr. Smith's shoulders and that the prospects of all-out race war in Southern Africa have become more a reality as a result of Mr. Smith's statement yesterday?

Does the Secretary of State agree that at the end of the day only the Africans and the Europeans of Rhodesia will be able to avoid the path towards mutual self-destruction? Will he consider a co-ordinated Western approach to warn the Soviet Union and the Cubans that they must keep out of the dispute, otherwise the consequences for East-West relations could be serious?

That danger is one of the dominant factors in the present situation. I do not doubt that there will be close and intensive discussions about it, particularly with the United States Administration. The additional danger has been created by Mr. Smith's rejection of our terms.

Does my right hon. Friend accept that many Labour Members do not agree that the racialist Government of South Africa have a large part to play in the matter, and that the South African Government are as brutal and racialist as the Rhodesian Government? Are not coloured peoples in those two countries fighting for their human liberty? No matter what the Tories say, is there any point in asking Mr. Vorster, who should set his own house in order democratically, to advise Mr. Smith and other racialists on how to set their house in order?

The Government have repeatedly made clear their views about the internal policies on the African régime of apartheid. But we have to face facts, and the fact is that the South African Government will, whether we like it or not, have an important part to play in the solutions to the problems of Southern Africa.

Did not British Governments ignore Rhodesia almost completely until the Central African Federation was set up? Did we not knock the Federation on the head and kill Sir Roy Welensky's efforts? Does the Secretary of State agree that since then our history in Rhodesia has not been something to be proud of and that this latest action will be known as the great double-cross?

The early actions of which the hon. Member complains were taken by a Government of which he was a keen supporter. They were the actions of a Conservative Government, not a Labour one. I do not accept the latter part of the hon. Gentleman's question. Most hon. Members, with a few exceptions, of whom the hon. Gentleman is one, take the view that over the last 11 years successive Governments—and not only Labour Governments—have sought to find a solution to the outstanding racial problem of Southern Africa. I see nothing disgraceful in the attempts that have been made by successive Governments to find that solution. Total passivity would have been disgraceful.

Have we now passed the point of no return in relation to any possible negotiated peaceful settlement? If so, will my right hon. Friend now invite leaders of Zimbabwe national parties here to discuss the future with him? Does he agree that, if we are to avoid a long-drawn-out and bloody conflict, resolute and quick action will have to be taken—including force either on our own behalf or through the United Nations?

I do not think that the use of force on our own behalf—that is to say, the despatch of British troops to Rhodesia—is a practical possibility. I certainly would not rule out any possibility in the future. But politicians, Foreign Secretaries and Opposition spokesmen should be reluctant to accept the notion that we have reached a point of no return. We are playing for such high stakes in Southern Africa that we should not rule out in advance any possibility of resumed negotiations in the future.

Does the Secretary of State agree that the conference collapsed for two separate reasons: the rejection by front-line Presidents of moderates from the black side, and Mr. Smith's latest rejection? Would it be right to do the antithesis of those two things: to encourage moderate opinion in Rhodesia, through the ANC and Bishop Muzorewa, and the white Rhodesians, other than the Rhodesian Front Party, to have some sort of get-together with joint United States and United Kingdom chairmanship?

I do not think that I can entirely accept the first of those two reasons for the breakdown of the conference, because we have made it clear to everyone in Southern Africa that, in spite of the front-line Presidents' support being given to only the Patriotic Front, if the conference reconvened the Government would expect it to do so with the same number of African delegations as before—some of whom do not constitute part of the Patriotic Front.

Does not the latest impasse demonstrate the folly of not putting down by force the original act of treason in 1965? Would it be a good idea for Britain to convene and ultimately substitute a de jure Government of Zimbabwe in exile comprising as many representative Southern African leaders as the Secretary of State can convene?

The answer to the first part of the question is 'No", and the answer to the second part is that it is a lot too early to propose such a long-term solution.

Does not this particularly tragic debacle illustrate forcefully the extraordinary mess made by politicians who have no personal experience of the situation in Southern Africa and who have little understanding of the events that produce political solutions in that part of the world? Surely 4½ million Europeans in Southern Africa will not dance on their own coffins simply to satisfy members of the Labour Party, hon. Members and other legislators who have a concept of Southern Africa that has been proved to be ludicrous in the rest of Africa during the past 10 years, a concept defined as majority rule, but with little relevance to the realities of the situation in that part of the world?

The hon. Gentleman appears to be an extraordinary relic of the nineteenth century in the ideas he has expressed to us. If there is a mess in Southern Africa now, it has been made not by hon. Members or by the British or American Governments but by the Governments in Southern Africa who have failed to recognise, as Mr. Macmillan said a long time ago, that there was a wind of change abroad.

Does not the right hon. Gentleman realise that, irrespective of the views of the Patriotic Front, the Kissinger proposals entirely conformed with what the right hon. Gentleman put to the House last year? Given that, would it not at least have maintained the Government's integrity if he and Mr. Richard had fought for those proposals in Geneva rather than abandoning them and bringing forward proposals which differed from both the view he had expressed to the House and the Kissinger proposals and, therefore, had no chance of being accepted by the régime in Salisbury?

When the hon. Gentleman has had an opportunity to examine our new proposals in detail, he will see that they are not wholly inconsistent with the Kissinger five points. I strongly agree with the editorials in today's Financial Times and The Guardian which said that there were no fundamental differences between the two sets of proposals. There are differences of detail but no fundamental differences.

One activity which would have been pointless would have been to go on talking about the Kissinger proposals when it had become clear that they were not acceptable to the nationalist delegations. Pursuing proposals that were acceptable only to the nationalists would also have been a waste of time.

When the hon. Gentleman studies our proposals, he will see that they offered a genuine possibility of agreement between the parties and included assurances to both parties.

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