asked the Secretary of State for Defence if he will now announce his revised estimate of the cost of Trident.

asked the Secretary of State for Defence when he expects to announce the latest cost estimate of Trident.

asked the Secretary of State for Defence what is the most recent dollar-sterling exchange rate of which the review of Trident costs has taken account.

Each year the long-term programme of my Department is re-costed as part of a planning process. Established convention indicates that I should assume a dollar exchange rate of £1 to $1··38. The updated Trident figure on this basis, and at average 1984–85 prices, is £9,285 million. Approximately 55 per cent. of the work by value is planned to be undertaken in the United Kingdom. I see no case for changing the conventions on which this Government and previous Governments have worked. However, in view of public interest, I am making available to the Select Committee on Defence and the Public Accounts Committee an indication of the effects of the changes in the exchange rates so that those wishing to predict exchange rate changes over the procurement period of the Trident programme will be able to do so at the exchange rate that they consider appropriate.

Will the Secretary of State admit that that cost is a gross underestimate, taking into account the current dollar-sterling rate? Will he further admit that the 55 per cent. figure in the United States is also an underestimate? Is it not outrageous that thousands of millions of pounds are to be spent in the United States on American technology and jobs? How can the right hon. Gentleman defend that situation to the millions of unemployed people in this country?

No doubt inadvertently, the hon. Gentleman has got the figures wrong. The figure that we believe to be right is about 55 per cent. of the cost in the United Kingdom, as opposed to 45 per cent. as the hon. Gentleman says. The issue is whether Britain needs its own independent nuclear deterrent, and whether the D5 Trident system is the appropriate one. That was the decision reached by the Government, and upon which they were elected. It would not be difficult to persuade the British people, employed or unemployed, that the security of these islands depends on Britain's independent deterrent and associated defence policies.

The Secretary of State will no doubt recall telling the Select Committee on Defence on 22 May 1984 that the whole submarine will be built here. How can he say that when £17 million worth is being built in the United States and another so-called design contract costing $63 million has been given to General Dynamics Corporation? Does he not recognise that, to use a favourite phrase of the Government, he has a grossly uneconomic weapon, which should be scrapped forthwith?

The hon. Lady does not believe that Britain should have an independent nuclear deterrent, and nor does the Labour party, to which she belongs, but that party was soundly beaten in the election, one of the reasons being precisely that conviction. I do not have the record of my evidence to the Select Committee in front of me, but I shall check it. The submarine will be part of a contract that we intend to place with Vickers. We think that within that contract the American contribution could be about 10 per cent.

Is there not a point at which the exchange rate will reach such an extreme that the missile system cannot be ordered without it causing immense damage to other conventional defence spending, unless the matter is fudged by extending the procurement life, presumably even beyond the life of the missile system?

The hon. Gentleman has asked two questions, the first of which concerns the changing assumptions in the period concerned. Ministers have given no authority to change the assumptions on which the costing has taken place. I have added a further instruction to my Department that there will be no change in the assumptions and that, subject only to security considerations, if there were in my view to be a need to change the assumption I would report that fact to the House. Otherwise, the position remains as it was when Sir John Nott first explained the circumstances relating to D5 to the House in March 1982. There will not be a spread, as has been suggested. I agree that trying to predict 18 or 20 years ahead for a programme of this type produces some elements of guesstimate at the tail end of the period.

Does my right hon. Friend agree that it is important to emphasise that the programme will enable us to retain a capability which successive Governments have thought it appropriate for us to have and that more than half the money that is to be spent will be spent in the United Kingdom?

My hon. and learned Friend is correct. He and the Government believe that an independent British nuclear deterrent is an essential part of the strategy that has kept the peace in Europe for a record period in contemporary history. As those policies patently have worked, and continue to work, we believe that they should be continued.

Does my right hon. Friend agree that cost can be assessed only in relation to effectiveness? Is he worried that the development of star wars defence systems might render Trident ineffective? Does that make a case for the development of alternative non-ballistic systems, which might also be cheaper?

My hon. Friend raises an important question, but the time scale in which those questions will be answered provides the answer to his question. The star wars project is a research project which will cover a period of time which will ensure that, even if the Americans determine to go ahead with the project—nobody knows whether they will have the capability or, in the end, will take such a decision—the fact remains that we should have Trident in service long before that. It would play a critical role in the defence of the West long before the star wars project could be implemented.

Will the Secretary of State confirm that three things have changed since the Government first took their decision: first, that the cash cost of the project has virtually doubled; secondly, that the time over which it is planned to repay it has been lengthened twice; and, thirdly, that the value of contracts to British industry has declined as a proportion of the total? Does he agree that those changes mean that we should re-examine the programme and decide whether, in the interests of British defence and industry, we should go for more spending on conventional defences?

The right hon. Gentleman will know that we have increased the defence budget by about £3,000 million in real terms and that that enhancement is broadly continuing into the future. It has given us vast extra resources, part of which will be spent on Trident. I have read the right hon. Gentleman's speeches in which he suggests that assumptions have been changed. How does he square that with the comments of my predecessor, Sir John Nott who said:

"I can confirm that we are talking about large numbers of jobs for British industry and a huge programme which will stretch over the period of 18 years." — [0fficial Report, 11 March 1982; Vol. 19, c. 979.]

Does my right hon. Friend agree that the Trident programme is unique, in that the envisaged costing covers the whole programme and everything that is required for Trident? All other defence expenditure costing does not include everything. For example, the Tornado programme did not include hardened shelters and the other necessary facilities. The same is true of warships and everything else. Does my right hon. Friend agree that when people talk about the cost of Trident it is the whole cost, whereas for all other defence programmes it is not?

My hon. Friend has made a most important point. It is especially relevant to his example of the Tornado programme. It took up a bigger proportion of the defence budget. It was a more expensive programme on a lower defence budget. The costing for it gave us only an aircraft that could fly. The weapons systems with which it had to be equipped and the infrastructure from which it would fly had to be added to the cost. That shows dramatically that, although the cost of Trident is large, because it is of such significance to the defence of the United Kingdom it is containable in our much larger defence budget.

Even if the Secretary of State can contain the financial cost of Trident, is he not incurring greater opportunity costs in terms of the Alliance's real needs, which, on the military side, are sustainability in Europe and, on the political side, conventional initiatives that will raise the nuclear threshold? Is he not in danger of appearing to behave as irrelevantly to the real needs of the Alliance with his Trident programme as President Reagan is with his star wars programme?

It was precisely because the Government wanted to increase conventional capability that we took decisions which have added £3,000 million to the defence budget in real terms. Precisely for the reasons that the hon. Gentleman has put forward so articulately, we could not understand the proposal to reduce the defence budget by one third, on which he campaigned at the general election.

I recognise the importance of Trident to us, but is my right hon. Friend aware that it would be much easier to support this policy if there were a bigger percentage of home-produced content in the weapon? Will he re-examine the weapon's control system to see whether it is possible for British contractors to quote for that part of the contract?

I agree with my hon. Friend that it would be attractive if, in the concept of the two-way street, there were a larger United Kingdom component in the Trident programme. It was one of the many contracts in existence when we joined, and it is extremely difficult for contractors to break into a pattern of industrial organisation of that sort. Attempts are being made and a significant number of companies are involved in the process, although not as many as I should like. That has to do with the companies themselves, not just with the attitudes of the British or American Governments. I would not want to pretend that, where we had to make a major decision about this uniquely important defence system, we were able to negotiate offset arrangements of the sort that characteristically we would want. Whereas on the concept of the two-way street the Government have a 2:1 adverse ratio, in the not-too-distant history it was a 4:1 adverse ratio.

In case the Secretary of State has not heard this news, let me tell him that the pound is not standing at $1·38 but is hovering around $1·10. That puts another £700 million, as he well knows, on the figure that he has given to the House. Therefore, the figure is £10 billion, not the £9·2 billion that he mentioned. Why does the right hon. Gentleman make himself look so ridiculous by pretending that all that money can be found without making substantial and savage cuts, in Britain's real defences? Apart from a perverse vanity, what is the point of going ahead with this weapon, which no rational person could contemplate using, and which, if it were used, would turn our island into a pile of irradiated rubble?

Are we to gather from the right hon. Gentleman's statement that the nuclear weapons which the Labour Government thought so necessary were useful, whereas the Trident programme is not? The Labour Government consistently maintained Britain's indepedent deterrent and, in secret, modernised it through the Chevaline process. Yet this Government, who are merely continuing the same programme, have apparently lost that support.

asked the Secretary of State for Defence if he will make a statement on the present standing of the experimental aircraft project.

The experimental aircraft programme is a joint venture by the Ministry of Defence and industry to bring together and demonstrate in one aircraft specific advance technologies which will be applicable to a variety of advanced aircraft. The design and construction of the experimental aircraft are progressing satisfactorily and it is on schedule for first flight in 1986.

Is the Minister aware of the urgent need for a fighter aircraft? Will he make a decision on the European fighter in March? If not, in the interests of defence, the RAF and the work force, will he go it alone?

I am interested in the fact that the hon. Gentleman has managed to switch the question to one about the European fighter aircraft, about which a question will follow soon. The experimental aircraft is not a prototype for the European fighter aircraft.

Will my right hon. Friend try to obtain data from this most important technology demonstrator and pool the data with that obtained from the French on the ACX aircraft, since both experimental aeroplanes will provide the technology needed for the Euro fighter, which we all hope will form the front line of the five air forces which have agreed joint staff targets?

I am glad that my hon. Friend has pointed to the advantages of and need for collaboration in such matters. I hope that what he suggests will be possible.

Can we expect the French to share their research secrets with us, when the French Government have allocated nearly three times as much money to the ACX project as we have allocated to the European fighter aircraft project? Why will the Government not invest more money, in the interests of British industry and jobs?

Again, we are straying into the question about the European fighter aircraft. I can only refer to the understanding that exists with regard to collaboration in aircraft matters. If we are to go ahead with the project, it will be essential to exchange technological information.

asked the Secretary of State for Defence whether, in the light of the recent accident involving American service men handling Pershing II missiles in Germany, he will review safety precautions for handling missiles with nuclear warheads in transit in the United Kingdom.

As I told the hon. and learned Member on 13 November, the arrangements for the safe transport of nuclear weapons remain constantly under review.

Recognising, as I hope the Government do, the anxieties about the dangers inherent in the handling and transport of nuclear missiles, will the Minister answer a simple question: are local fire and police authorities informed when missiles are to pass through their areas?

As I told the hon. and learned Gentleman previously, guidance is issued to some chief constables and fire officers. I cannot go further than that, because it is not the Government's policy, any more that it was our predecessor's policy, to give any information about the routes or methods of transport of nuclear weapons.

With regard to the movement of nuclear weapons and their resting places, did my hon. Friend notice the comments of Mr. Roger Spiller, the male vice chairman of the CND, that the campaign at Molesworth, unlike the unsuccessful campaign at Greenham common, will not be left to women this time because

"Molesworth is more impOrtant than Greenham common"?

I am grateful to my hon. Friend. I assure her that the addition of a male element will make this campaign no more successful than the previous one.

asked the Secretary of State for Defence if he will make a statement concerning FH70 ammunition procurement.

Deliveries of FH70 ammunition began in 1978 and procurement of certain kinds is continuing. The allocation of work on the FH70 programme is governed by a memorandum of understanding agreed by the participants to the programme.

Is it not a matter of some concern that the FH70 ammunition, which was due from Germany at the beginning of December, appears not yet to be available to us? It is three months late.

There have been some delays, due to problems in the Defence Procurement Executive of the German Government, but that does not alter the position with regard to the placing of the order. Much as I would have liked it to go to the royal ordnance factories, it was out of the question that it should do so under the terms of our understanding.

In the light of my right hon. Friend's reply to the hon. Member for Blaydon (Mr. McWilliam), can he tell us whether the final cost of the contract for the FH70, which has gone to Germany, will be more than it would have been had the contract been carried out in this country?

I understand that the prices are competitive in this matter.

As the ammunition is used in the main battlefield Howitzer, will the Minister of State give an undertaking that it is not the intention now or in the future to adapt the Howitzer to take either nuclear warheads or the enhanced radiation weapons?

I can give the hon. Gentleman a categorical no. If I am mistaken, I shall let him know.

In regard to the FH70 order, will my right hon. Friend bear in mind the excellent record and delivery times furnished by the royal ordance factory at Birtley for previous FH70 orders and compare these with the apparent unreliability of the German source?

I have explained that the delays which have occurred in regard to the project have been within the Defence Procurement Executive, not, so far as I am aware, within German industry. Nevertheless, I am prepared to pay tribute to the royal ordance factory in the way that my hon. Friend would like.

asked the Secretary of State for Defence if he will make a statement on the evidence given by his Department to the Australian Royal Commission currently in London investigating the safety of the United Kingdom nuclear test programme in the 1950s.

Her Majesty's Government are cooperating as fully as practicable with the Australian Royal Commission. Twenty-five witnesses are being assisted to give evidence to the commission. They include high-ranking staff who were in responsible positions during the test programme, and the first to be called was Lord Penney. The Ministry of Defence has also made available a large number of trials and other reports and is providing the commission with access to and guidance on the massive volume of contemporary material relating to the test programmes.

Have not the Government been criticised by the commission for refusing access to certain documents which it thought were vital? If so, is this not another example of the Government being more concerned to avoid political embarrassment than to show concern for national security?

No. On the contrary, we have gone out of our way to be helpful. We have released documents ahead of the 30-year rule; we have given members of the commission access to Aldermaston; and we have assisted them in looking at the material. But—and I hope the hon. Gentleman will agree with me—quite rightly we are witholding information which is still classified, and for good reason.

When will the report on the tests being conducted by my right hon. Friend's Department into British service personnel who were in that area in the 1950s be available, and when will the findings of the tests and analyses be published?

The report will not be available until the autumn of 1986, due to its complexity. There would be no point in having the report if the findings were not made generally available.

asked the Secretary of State for Defence what representations he has received concerning Government proposals to transfer the training of Scottish junior soldiers to England.

Representations have been received on this subject from Members of both Houses of Parliament, representatives of local authorities and from members of the public.

Will the Minister acknowledge that he and his colleagues have totally failed to make a case for the proposed closure and that the only case they have made is that they will save £3·382 million? In the context of the defence budget, is that not a paltry sum to end 200 years of starting the training of junior infantry men within Scotland? Will he reverse the decision and continue to ensure that Scottish regiments' recruits for the infantry are trained within Scotland?

I know of the hon. Gentleman's interest in this matter, but the closure of Bridge of Don is part of an overall scheme which will reduce the number of establishments from 21 to 13 and save about 100 civilian jobs overall and £8 million worth of capital costs, and also substantial running costs. The decision has been taken and it is irrevocable.

Does the Minister appreciate that these proposals continue to cause grave disquiet among many of my constituents, who remain deeply unhappy at the prospect of losing an important visible regimental link at Bridge of Don? Is it not a fact that the argument on unit costs could be transformed by a simple policy change whereby more junior training took place at Bridge of Don rather than elsewhere? Will he examine that option carefully before any final step is taken?

I understand my hon. Friend's concern, which he has expressed on a number of occasions in public and in private. We have looked at all the options. In 1983–84, 183 recruits went through Bridge of Don, whereas 785 went through the Shorncliff establishment in Kent, so there is really no comparison.

asked the Secretary of State for Defence if he will make a statement concerning the proposed European fighter aircraft.

asked the Secretary of State for Defence what is the current position of collaborative negotiations on the proposed European fighter aircraft.

The feasibility study on the European figher aircraft is continuing and we expect to receive reports on the outcome of the industrial aspects of that study shortly. Discussions are also proceeding at Government level on a range of activities affecting the programme. Defence Ministers will meet in the spring to review the latest position.

May we be assured that, should we go ahead with the production of a European fighter aircraft, a major portion of the production work will take place in the United Kingdom?

If we follow precedent in this matter, the work sharing will be according to the number of aircraft that the respective air forces need.

Will my right hon. Friend accept that rumours of a deferment of the meeting of Defence Ministers of the countries likely to be involved in the project, originally scheduled for the spring, respresent yet more success for the French, one of whose objectives seems to be to delay this project at any costs either to the benefit of their industry or to the detriment of ours? Does he appreciate that, in those circumstances, British Aerospace and other potential partners on the United Kingdom side are expecting a firm stand to be taken when the meeting eventually takes place?

I said in my main answer that the Defence Ministers intend to meet in the spring to review progress and that the results of the study will be available shortly. That being the case, I hope that we can make progress on this matter. On the other hand, anybody with experience of the project will know that difficulties have arisen in the past, that compromises have been necessary and that there may be considerable argument before we can decide whether to go on to the next stage. It is the intention of the Government as a whole to make this collaborative project work if we can because it will be to the advantage of our Air Force and industry.

Will the Minister confirm that the basic weight of this aircraft should be between 10 tonnes and 11 tonnes, because it would then be likely to meet the operational requirements of the RAF?

No, Sir. The work is being done around a weight of 9½ tonnes, with some opportunity to investigate a variant on that.

Is my right hon. Friend aware that as up to 800 of these aircraft could eventually be produced for the countries interested in obtaining them, this is a matter of enormous importance for the development of future technology and employment prospect in Britain, especially for companies interested in tendering under the programme?

The sales prospects for this aircraft within NATO and to third countries will be greater if it proceeds as a collaborative venture than if, for instance, we are forced back on to a unilateral solution.

Is the right hon. Gentleman aware that there is considerable concern in the aircraft industry lest this project ends in fiasco? Is he further aware of the feeling in the industry that the Secretary of State for Defence is being led by the nose by the French? Is it not a fact that the requirements of the French air force and of the RAF are different, in that the RAF wants a combat fighter while the French want a ground attack fighter? Will he now say whether, if the project is cancelled and does not go ahead, we will build our own aircraft?

I shall certainly not answer the last part of that supplementary question directly because, first, it is our intention to try to make the project succeed, and, secondly, if we cannot go ahead with all the partners which are at present involved, it obviously makes sense to see whether it would be sensible to proceed with other partners. My judgment is that industry in Britain is much more realistic and pragmatic about this matter than is the right hon. Gentleman.

asked the Secretary of State for Defence if he is satisfied with the developments within the Western European Union of the joint defence consultative process originally proposed last summer.

Yes. The Rome meeting of Western European Union Foreign and Defence Ministers last October was an excellent start. I am looking forward to the next meeting with my WEU colleagues later this year.

I thank my right hon. Friend for his answer. Does he think that, apart from the framework of the discussions, this process is capable of producing beneficial side effects and results—as, for instance, British weapons sales to the French in greater measure? Is my right hon. Friend optimistic that we may be able to sell the ALARM missile system to the French?

My hon. Friend will be aware that one of the matters about which the Ministers gathered in the WEU felt strongly was that we should not indulge in overlapping with other or existing organisations. Arms collaboration with our allies—the French would feature prominently in that collaboration—is very much seen as the preserve of the independent European programme group, where we have recently taken decisions and hope to move forward on a very significant range of collaborative projects.

Can my right hon. Friend say to what extent he wants the WEU to evolve into a uniquely European voice upon defence and arms limitation matters?

I believe that the Ministers from all the countries who attended that meeting realised that there were a range of reasons that brought us together. It was very much a formative experience for Foreign Ministers and Defence Ministers to meet one another. There is shortly to be another meeting. I have no doubt that in both that forum and a range of other appropriate fora, arms control will be a very live issue in 1985.

Does the Secretary of State agree that the French are very much cooling off with regard to the suggested new liaison and that it is very unlikely that the optimism he has displayed will prove to be of any import? The important element is the French, and the French are no longer willing and happy to participate in this exercise.

The Labour party has been so unsuccessful in speaking on behalf of the British people that I am not surprised that it should now speak on behalf of the French. I doubt whether its views will be any more attractive in France than they are in Britain.

asked the Secretary of State for Defence if he will make a statement on the implications for United Kingdom defence policy of the stockpile of chemical weapons by the Union of Soviet Socialist Republics and its allies.

asked the Secretary of State for Defence if he will make a statement on the United Kingdom's defensive capability against chemical weapons.

We view the massive Soviet chemical weapons capability with particular concern. We believe that total abolition is the best answer and are continuing to work in Geneva for a comprehensive, verifiable and worldwide ban on such weapons, including the destruction of existing stocks. In parallel, we keep our defensive measures under careful review in the light of the threat. A substantial investment has been made over many years to provide our armed forces with defensive protection against chemical attack.

Can my right hon. Friend shed any light on why the Soviet Union is currently running heavy troop training programmes in protective clothing for chemical warfare, bearing in mind that this country abandoned chemical weapons nearly 30 years ago, that none are deployed currently in Western Europe and that the Soviet Union has at this moment 300,000 tonnes of chemicals for military use?

I am the first to share my hon. Friend's anxiety about the training exercises in which the Soviet Union involves itself, including those involving chemical weapons. I believe that it would be far better employed in pursuing as actively as we and our American allies wish to pursue the arms control proposals that are on the table.

Bearing in mind that when, in the late 1950s, the United Kingdom renounced the offensive use of chemical weapons there was no similar response from the Soviet Union, what are the present prospects for the success of the talks?

I am sure that my hon. Friend will understand that it is extremely difficult to forecast accurately the prospects for success in arms control talks. All that one can say on behalf of this Government is that we shall make every endeavour to bring those talks to a fruitful conclusion.

Will the "every endeavour" that we are prepared to make include trying to convince the Americans that the challenge inspection facilities of chemical manufacturing plants should be extended to all plants, whether or not they are state-owned?

If the hon. Gentleman follows the details he will be aware that the Americans have explained their attitudes on this, which will have an effect upon a wide range of plants in the United States outside those owned by the Government.

Is my right hon. Friend happy with the priority that is given in our armed services to nuclear, biological and chemical training? Does he anticipate the early introduction of the next generation of NBC protective clothing?

I can assure my hon. Friend that we maintain our research into those matters and update the equipment as appropriate from time to time. I cannot tell the House that I am satisfied with the existing situation. I do not see how any Secretary of State for Defence could be when a country, in alliance, that poses the threat to our interest has such large stocks of chemical weapons and we have none.

Will the right hon. Gentleman confirm that the United States has stocks of chemical weapons in Germany? Is he aware that the Opposition support wholeheartedly attempts by Her Majesty's Government to obtain a comprehensive ban on all chemical weapons and any efforts being made to improve the capability of NBC protective uniforms? What lessons have been learnt from Operation Lionheart in that respect?

The hon. Gentleman will be aware that the United States' stocks of chemical weapons are of a very aged character, that there has been no updating of those stocks for a significant period and that they are of a limited scale. We are still studying the lessons of Lionheart in our Department. As I have already said, we shall continue to research and update the protective equipment in that area.

Will the Secretary of State confirm that it will be no part of the review that he announced earlier to allow the Americans to stockpile chemical weapons in British bases?

I have no proposals of that sort before me.

asked the Secretary of State for Defence if he will extend the Ethiopian tour of duty of Royal Air Force transport planes for a further three months.

Our offer to extend the airlift to the end of March and to review the position again nearer that time has been accepted by the Ethiopian Government. I am glad to tell the House that the British RAF and Army detachment in Ethiopia has now airlifted some 6,000 tonnes of relief supplies, and has taken part in recent trials in the air dropping of supplies to more inaccessible parts of the famine area.

I think that hon. Members on both sides of the House will pay tribute to the work done by the RAF. The public, having responded so well to the appeals that have been made, think that it is important, both for distribution purposes and psychologically, that the Government continue their commitment. Will the Minister give the House more reassurance about the future extent to which food can be taken to the Tigré and Eritrea regions of Ethiopia by the RAF?

I am grateful to the hon. Gentleman for what he said about the contributions made by the armed services. Undoubtedly, they have been strikingly effective in the utilisation of the two Hercules that we have out there. We shall continue the dropping operation by conventional landing techniques, but, as I have said, we have just started exploring the possibility of air dropping. Whether we shall be able to do that will depend upon whether we can put together arrangements for the landing of ground parties, which is obviously crucial when dropping by free fall.

Will my right hon. Friend go further and warmly congratulate the Hercules squadron—both the aircrew on their exceptional airmanship and the ground crew on their exceptional servicing record—thus keeping the squadron going on short runways and in difficult conditions, and thereby playing an important part in the relief of this difficult part of east Africa?

I am most grateful to my hon. Friend. I can certainly bear witness, from my experience out there just before Christmas, of the difficult landing and take-off conditions which the RAF has successfully dealt with, not least in coping with the considerable problems represented by the bird strikes, which took out about 9ft of the leading edge of one of the wings of the Hercules just before Christmas. All concerned have done outstandingly well.

I congratulate the Government on their work, but will the Minister confirm that the cost of the work is being borne by the Ministry of Defence and will not come out of the Overseas Development Administration budget?

No, that is not quite correct. For the first three months of our contribution the costs were borne exclusively by the Ministry of Defence, on the defence budget. With the extension of the operation from the beginning of February, we have agreed to share the costs equally between the Overseas Development Administration and the Ministry of Defence.

asked the Secretary of State for Defence when he last reviewed the role and resources of the Royal Observer Corps; and if he will make a statement.

The role and resources of the Royal Observer Corps are kept under regular consideration in conjunction with the Home Office. The corps continues to provide an excellent service and there are no present plans for a review.

While I thank my hon. Friend for his reply, may I ask him to say whether he is committed to sustaining the resources and morale of those who serve the Royal Observer Corps, and will he from time to time say how the great majority of the British people appreciate its vigilance?

I am delighted to have this opportunity of paying tribute to the Royal Observer Corps. Its morale is excellent. It does a first-class job for us. There are 11,000 serving members at present and the corps costs less than £5 million a year. It is a first-class unit.

asked the Prime Minister if she will list her official engagements for Tuesday 29 January.

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.

As there still is great public anxiety on the subject, will my right hon. Friend undertake this afternoon to look at the subject again and reassure the House and the nation that the Government will look twice at the dangers of imposing any additional forms of taxation on pension funds or lump sum payments?

I recognise the concern about this subject. I refer my hon. Friend to the statement that was made in the House, in response to questions, by my right hon. Friend the Chancellor of the Exchequer. As my hon. Friend will be the first to appreciate, I cannot say anything more at the present time, but I do urge him to look at that statement by my right hon. Friend.

Three weeks ago the Government were against the idea of increasing interest rates to defend sterling, but they did increase them and it did not work. Two weeks ago the Government scorned the idea of intervening to defend sterling, but they did intervene and it did not work. Can the Prime Minister tell us what she is going to do now?

I recall the right hon. Gentleman saying on 15 January that he was absolutely against speculation against the pound and that he thought it was "irresponsible and irrational". If that is what he thought then, I hope that that is what he thinks now, and that he thinks that the action that has been taken to stop this is right and well judged in the circumstances.

I do think it irresponsible and irrational, but it is the right hon. Lady who believes in the market system and not us. Her response again today will impress nobody, either at home or abroad. It is the right hon. Lady who has surrendered policy-making entirely to the whims of the market. The result is chaos, a crisis of confidence and a huge rise in interest rate burdens on both business borrowers and home buyers. Is the right hon. Lady going to change her policies in the light of that experience, or will she go on with the same mixture of panic and paralysis that has brought us to this mess?

I am not quite sure whether the right hon. Gentleman is objecting to what we have done or saying that we should have done nothing. In fact, the action that my right hon. Friend took was to maintain the financial strategy that has brought inflation lower for a longer period than any other Government have done previously and which, in spite of the effects of a coal strike—[Interruption.]—for 10 to 11 months last year has kept the current account in surplus.

The right hon. Lady's strategy is coming apart at the seams, and she knows very well that it is coming apart at the seams. What we want is a real strategy to give proper growth and recovery to our economy, and all we are getting from the Government, especially now, is dithering and, again this afternoon, dodging. That will only mean more on the dole and more in debt. We have not a crisis of confidence in the country but an absence of confidence in the Government. Are the Government willing to change their policies, and will the Prime Minister really help by chucking out the Chancellor?

The action taken has been such as to impose financial discipline on all sections of the economy, including the Government. I remind the right hon. Gentleman that gross domestic product is at its highest ever level. I hope that he is pleased about that. Fixed investment across the economy is at its highest ever real level. Retail sales are at their highest ever real level; they have increased by 4 per cent. in volume. Profits increased by 20 per cent.—[Interruption.]—in the first three quarters of 1984. The Government's record on inflation is second to none. If the right hon. Gentleman listens to what is being said about unemployment, he will understand that the most important thing in tackling unemployment is to keep down inflation.

roseȔ

Order. I repeat what I said last week during Prime Minister's Questions. The Leader of the Opposition gets a fair hearing and it is only right that the Prime Minister should get an equally fair hearing.

As interest rates have been increased to a level that must put at rest any fears that there may have been about inflation, and as the markets are now offering the best opportunity ever seen for our exporters and business men to do business abroad, what reason have we to complain?

As my hon. Friend will be aware, markets are opening up because of the strength of the dollar and the weakness of sterling compared with the dollar. He will be aware also that it is vital to stay competitive on wage costs. The people who can benefit most from that are those who are best able to take advantage of the present exchange rate. My hon. Friend will know that our wage costs are rising and that the Opposition support every wage claim. At the same time, the wage costs of our competitors are either remaining stable or decreasing. If the Opposition want to improve the prospect of employment, they must help to keep down unit wage costs.

As, in part, sterling's problems stem from uncertainty over oil prices, and as over-production at a time of depressed demand leads to a disorderly market, will my right hon. Friend confirm that the Government have reserve powers to limit production and depletion in the North sea? Will she consider using these to underpin the light crude oil price and so help to bring back stability to the oil market?

The policy that we pursue is really the same as that of the United States. We do not have powers to restrict production in the North sea, but we have powers to purchase 51 per cent. of that production at whatever is the market price. I think that we must stick to that.

When will the Prime Minister recognise that the rest of the world does not share her rosy view about her handling of the economy and that it is possible that the rest of the world is right and she is wrong? Since she spoke on "Woman's Hour" and said that the pound was undervalued she has had to increase interest rates to their highest level for 150 years. Will she explain to the House why it is that the pound does not do what she tells it to do?

I note what the right hon. Gentleman says about interest rates. He will note that interest rates in real terms are not as high as they have been in the United States, and I am often urged to follow the course of the United States.

asked the Prime Minister if she will list her official engagements for 29 January.

I refer the hon. Gentleman to the reply that I gave some moments ago.

In view of the shambles in which the Prime Minister finds herself, does she not think that it is now appropriate for her to dispose of the Chancellor of the Exchequer, in the national interest? As she cannot find a satisfactory alternative, will she say whether the promised tax concessions will be implemented in the Budget? If they are, will that result in more new real jobs, in her terms?

I think that the hon. Gentleman must await the Budget. I remind him that the Government have raised the thresholds of personal taxation by 16 per cent. That means that income that is tax-free has been increased by 16 per cent. The previous Labour Government lowered thresholds.

Does my right hon. Friend accept that, although the high interest rates that have had to be introduced are a worry and a difficulty for industry, business in Britain will, nevertheless, support the Government while they continue to keep inflation down? Indeed, business would probably send the Government a message saying that they must try harder in dealing with inflation, because inflation destroys both large and small businesses.

I agree with my hon. Friend. It is always a disappointment to have to raise interest rates, but the effect would be far worse if inflation were allowed to increase again. On 7 February 1978 the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said that

"in terms of promoting employment opportunities throughout the country … nothing is more important than containing inflation."—[Official Report, 7 February 1978; Vol. 943, c. 1271.]

asked the Prime Minister if she will list her official engagements for Tuesday 29 January.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Is the Prime Minister aware that, at the weekend, all over Scotland there was snow, and temperatures at well below freezing, old people suffering from hypothermia and pneumonia, and yet still there was no exceptional weather payment? How much longer must the north of England and Scotland suffer these arctic conditions? How many more old people must die before the right hon. Lady changes her mind?

This question is asked on every occasion, and on every occasion I give the hon. Gentleman and his hon. Friends the same reply: this matter is under review. The main heating benefit is the regular heating amount paid. The heating amount paid to pensioners under this Government far exceeds the amount paid under any previous Labour Government. This Government have everything to be proud of in the way in which they have looked after the heating allowance for pensioners.

I comment on the proposed celebrations of VE day. Does my hon. Friend recall that the war started with the cruel dismemberment of Poland and that, in what followed, Polish pilots helped to defend this island and Polish troops fought with distinction alongside our own troops? Yet, when the war was over, those Polish troops found that they had lost their homeland. I ask my right hon. Friend, most respectfully, whether she will ensure that Polish veterans living in this country, and Czechoslovaks who shared the same fate, will have an honoured place in any parades or church services?

I gladly join my right hon. Friend in paying tribute to what Polish troops did in wartime and to the gallant way in which they fought throughout the war. We shall ensure that his point is taken fully into account.

asked the Prime Minister if she will list her official engagements for Tuesday 29 January.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Has the Prime Minister seen the estimates that, if the coal strike ends, consumption of oil will decrease by between 500,000 and 1 million barrels a day? If the right hon. Lady is so good at predicting what will happen to the economy, will she predict what will happen to the price of oil in that event? And what will be the effect on the pound?

Anyone who could predict that would not be on this earth, and I doubt whether they can even predict that up aloft.

asked the Prime Minister if she will list her official engagements for Tuesday 29 January.

I refer my hon. Friend to the reply that I gave some moments ago.

Does my right hon. Friend accept that, of the factors affecting sterling, many — such as the value of the dollar, the price of oil, the world recession and the size of the United States' deficit—are completely outside the Government's control? Does my right hon. Friend accept also—[Interruption.]—that the majority of my constituents, many of whom do not vote Conservative, think that she has done and continues to do an outstanding job?

I agree with my hon. Friend, and all reasonable people would agree with him on the facts. The price of oil is outside the control of the Government. Total production is far too small to have an effect on the price of oil. The rise in the dollar is also outside the control of the Government. We have done all that we can about that by taking part with the G5 nations in co-ordinated intervention. We are left with two problems, which are the decisions that have been taken about the price of oil and the coal strike.

asked the Prime Minister if she will list her official engagements for Tuesday 29 January.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Will the Prime Minister explain to the House why real interest rates in this country are now double those in Germany? Is it not a reflection of a complete lack of international confidence in her and her Government?

No, Mr. Speaker. If the hon. Gentleman will study the international comparisons he will find that West Germany has run a strict financial policy for many years. Therefore, it has brought its inflation down further than ours. In West Germany it is 2·1 per cent. He will also find that it has kept its public expenditure under control and that it made considerable sacrifices for two years. West Germany has—[Interruption.] I wonder whether the hon. Gentleman is interested in the reply or whether his hon. Friends are just interested in shouting. He asked me about West Germany, and I pointed out that its inflation is lower than ours through a strict financial policy. In answer to a previous question, I pointed out that it keeps its wage costs down. Its unit wage costs are lower than ours. It has kept a strict control of public expenditure. In the past two years West Germany has cut unemployment and maternity benefits and delayed pension increases. With that strictness over the past two years, and some of the sacrifices made by her people, it is not surprising that the deutschmark should have risen against sterling.

On a point of order, Mr. Speaker.

Does it arise out of Question Time?

Yes, Mr. Speaker. As you may know, Mr. Speaker, early today we asked for a statement from the Chancellor of the Exchequer on the Government's economic policy, and such a statement was refused. In view of that, the Prime Minister's utterly inadequate responses on that matter, which is of central importance today, and because of the Government's bungling economic policy as evidenced by manufactured trade and output figures, unemployment figures—[Interruption.] interest rates figures and the current turmoil, I wish to give you notice that we shall be tabling a motion censuring the Government for their utter mismanagement.