To ask the Secretary of State for Defence what plans he has to establish an internal advisory group on the health of Gulf war veterans. [6507]

To ask the Secretary of State for Defence when he last met representatives from the Gulf War Veterans Association to discuss Gulf war syndrome. [6513]

The new internal advisory group on Gulf war veterans' illnesses, which I announced on 16 June, met for the first time last week, to aid my consideration of the detailed policy statement, "Gulf Veterans' Illnesses: A New Beginning", which I am publishing today and contains 20 key measures setting out how the Government intend to address Gulf veterans' concerns in future.

I am grateful to my hon. Friend for that reply. I welcome that initiative and the others that he has taken since 1 May to deal with the incidence of ill health among our veterans from the Gulf, one of whom is my constituent, Corporal Mervyn Grey, who was exposed to large amounts of pesticide during his service in the Gulf and has been unable to work since. When will the group produce a list of final recommendations for the Government? Will my hon. Friend ensure that they are made available to the public?

I can certainly assure my hon. Friend that every piece of information that I have will be made public. As for the current situation, I know that the Gulf veterans will listen closely to what is said today. I am sure that they will be only too keen to update me on future recommendations.

I congratulate my hon. Friend on the attitude of the Labour Government which is completely different from that of the previous Government. We recognise that our brave men and women who fought in the Gulf have been left will real problems connected with Gulf war syndrome. There is such a thing, but it was not recognised by the previous Government. I am sure that my constituent, Mr. Tilson, will be pleased to hear my hon. Friend's announcement that research will continue in partnership with our colleagues who fought in the Gulf war rather than according to the adversarial approach taken by the previous Government.

I thank my hon. Friend for his comments. As I have said before in the House, we all owe a debt of honour to those men and women who were prepared to sacrifice their lives and to take risks with them on behalf of the country. Our future relationship with the veterans will be marked by openness and dialogue. Two meetings have already been held between officials, Gulf war veterans and me. The openness is already apparent by the provision of information, which we will make available to the veterans, and the new research into the interaction between the vaccines that they were given and the nerve agent pre-treatment sets tablets. The dialogue is also apparent from our efforts to involve Gulf war veterans in the process, including the research project, which will be overseen by a panel of independent experts. I am glad to say that we have invited the veterans to name their independent assessor on that panel and that they have welcomed that offer.

Does the hon. Gentleman agree that there seems to be a difference between the supportive attitude of the Ministry of Defence to soldiers, sailors and airmen who are serving in the armed forces and its attitude to those who have unfortunately been invalided from the forces? Is he aware that the former Defence Committee thought that it might study that difference? Would he support such a study were it to be conducted?

My approach to the veterans, and that of the Government, is that we have a duty and an obligation to them because of the sacrifices that they have made for this country. There are anomalies involving pensions and other benefits. There are anomalies in the treatment of those injured in the service of the country in Northern Ireland, who can receive criminal injuries compensation, and those serving in Bosnia. We are examining all the anomalies and will attempt to produce schemes that are in the best interests of, and provide the best security for, those who have served this country.

I thank the Minister for his statement. He mentioned the main Gulf war veterans group. Is he satisfied that isolated veterans in other parts of the country are fully aware of what is going on? I thank him for his promise to meet me with the Northern Ireland representative next week.

I commend the hon. Gentleman on his robust advocacy over many years on behalf of those who are suffering and who served in the Gulf. One of the practical points of the 20-point plan that I have issued today, at the suggestion of the veterans in an earlier meeting, will be the dissemination of information through local general practitioners, the Department of Health and service units to bring the medical assessment programme to the attention of any veterans who are not aware that it is available. If anyone has any other suggestions on how we might disseminate information or make veterans aware of either the medical or the financial resources to which they are entitled, I shall be only too happy to consider them.

I thank the Minister for his useful and helpful announcement this afternoon. I look forward to the report's publication. Will he make available to Gulf veterans, who loyally served this country, the information that has been made available to American service men and women who have suffered similarly from Gulf war syndrome and who seem to have had more success in persuading their Government to acknowledge the syndrome and in obtaining the compensation that they deserve? How many people are known to have had a reaction? What is the Ministry of Defence doing to contact individuals and make information available to them?

I am not aware of any area in which other Governments, including the American Government, are further ahead of this new Government in providing information. I have studied the subject of compensation carefully; there are two ways of providing it. The first is the American way, which is to pay large sums of money—largely, but not exclusively, related to the fact that veterans have to pay private medical insurance. We have a thing called the national health service, which this Government are bent on maintaining. The second is no-fault compensation, which is already available to veterans here under their war pensions. That compensation is a supplement—a separate pension from the service pension. The war pension itself is of considerable capital value. A veteran who is on 50 per cent. of the war pension of £107 a week—when supplementaries are taken into account—would have to spend £110,000 capital to purchase that cover. Someone aged 35 who is on a full war pension has a pension with a capital value of £420,000. In addition, unlike their American counterparts, even if our veterans receive that pension, they are entitled to take the Ministry of Defence to court; should they do so, we shall review the position again.

I thank my hon. Friend for the manner in which he received my recent deputation when I took to his Department Messrs. Turnbull, Doyle and Robertson. My hon. Friend gave up much of his time and listened carefully. It is the wish of my constituents who are Gulf war veterans that Group Captain Coker should make as much input as possible into the workings of the group. When will the group make its findings known? I am concerned that my constituents' health is deteriorating rapidly and I wish to see them compensated and well treated.

I welcome the advice that I received from my hon. Friend's constituents when they came to see me in the Ministry of Defence. I know that there was a perception among the veterans that Group Captain Coker, who had previously been involved in the medical assessment programme, had somehow been dispatched because of his views. I am not entirely sure that that was the case and my hon. Friend will be pleased to know that in the past few days I have spoken to Group Captain Coker, who has agreed to rejoin my advisory committee. I am sure that that fact will be warmly welcomed by the veterans as another sign of the trust which the Government knew was lost and which has now been re-established.

No one doubts that many hundreds of Gulf war veterans are ill and we welcome this further initiative to find out what went wrong. If there is any new scientific evidence that might shed light on what went wrong, of course it should be pursued and I support that. May I ask the Minister about research? He will know that, last week, Lord Gilbert said that the new Ministry of Defence research programme, which was announced last month, has not been recommended by the Medical Research Council. Will he take steps to ensure that the research has that validation?

I shall certainly do that. I think that my noble Friend meant—and he was quite correct—that it was initiated not by the MRC but by me. I shall continue to initiate the exploration of any avenues that will assist research and medical resources for our Gulf war veterans.

To ask the Secretary of State for Defence if he will make a statement on recruitment to the armed forces. [6508]

Because of the legacy of shortages left by the previous Government, this Government have made recruiting to the armed forces one of their top priorities. It is of particular concern that manning shortages exist in all three services and, in some areas, are set to get worse. We are therefore examining, as a matter of urgency, new ways in which recruitment to the armed forces can be improved in order to reduce the significant shortfalls left by the Conservative Government.

This weekend, I visited 2 Signal regiment on exercises at Otterburn. That York-based regiment has recently served in the Falklands and in Bosnia, yet I learnt that it is 25 per cent. under strength as a result of the mismanagement of the defence draw-down under the previous Government. I was impressed by the commitment of the officers, men and women of the regiment and of the Gurkhas, who also serve in the regiment now. What further steps can the Labour Government take to reduce those manpower shortfalls in our regiments?

I assure my hon. Friend that, over the past two months, I have become only too well aware of the significant problem of undermanning, which is a legacy of the previous Government's incompetence. It is a deplorable and unacceptable legacy, which is being experienced by all three services. It is especially acute in the Army, where there are significant shortfalls in the infantry, the Royal Armoured Corps and the Royal Engineers. We are committed to reversing that problem and the recruitment and retention of service personnel lies right at the top of our priorities. I take this opportunity to say to anyone outside the House who thinks that the services are in decline that that is not the case: in the armed forces there are very many opportunities for young men and women to be equipped with skills, training, discipline and character, which will not only serve their country well, but will serve them well in their future careers.

The comments of the Minister of State are of a party political nature: I do not think that they do him credit, nor are they entirely consistent with the Secretary of State's calls for consensus on defence matters. Does he acknowledge that numbers in the armed forces have as much to do with retention as with recruitment? If the armed forces and his Department were given the resources that they require to meet their current commitments, the question of tours of duty could be addressed and morale in the armed forces—especially in the infantry—could be increased. Soldiers could thereby be retained by the armed forces: something that they want to happen, but which morale—often at home—prevents.

Yes, indeed. As a statement of historical fact, I would alert the hon. Gentleman to the fact that I have already referred to retention as well as to recruitment. As a statement of objective fact, I draw to his attention the fact that the Army is already almost 5,500 short and that the problem is due to worsen, possibly to as many as 7,500 short. As a statement of consensus, I hope that he will give the Government full backing in their attempt to turn that situation around.

I am glad that the Minister drew attention to the scale of the figures. A shortfall of 5,500 or 5,800 below regimental complement—which he might have spoken of—is very serious and places a great deal of strain on individual units and individual soldiers. Will the Minister give a clear commitment that he will seek to increase recruitment to meet complement instead of reducing complement to meet current recruitment levels?

I shall give the hon. Gentleman a clear commitment that recruitment to the armed forces will be among my highest priorities. However, in the spirit of consensus, I draw attention to the points made by the hon. Member for Romsey (Mr. Colvin), who said that, in the armed forces, retention is as big a problem as recruitment. It may well be that the way in which we attempt to retain people, especially early in their time in the services, has not taken account of the 30-year drift separating the culture and fitness of civil society and that of military society. Those matters will be among my highest priorities.

To ask the Secretary of State for Defence if he will make a statement on the future of Horseshoe barracks in Shoeburyness. [6509]

Horseshoe barracks has been closed for some years and will be made available for sale within the next 18 months as it is no longer required by my Department.

In view of the high unemployment in my constituency and the depressing news about further job losses in the Shoebury ranges, will the Government ensure that there is no undue delay and commit themselves to ensuring that that magnificent site is used to reinvigorate the economy of Shoeburyness and does not simply become another house building site?

As the hon. Member is aware, the joint working group was established last year to co-ordinate the sale and development of the site. That, as he knows, includes the Ministry of Defence, Essex county council and Southend-on-Sea borough council. Obviously we encouraged them to work as fast as possible to make the site ready for development.

To ask the Secretary of State for Defence if he will make a statement on the future of the Trident programme. [6510]

We will retain Trident to provide a minimum credible deterrent while pressing for the verifiable global elimination of nuclear weapons.

Will the Secretary of State clarify his ambiguous comments in The Daily Telegraph last week? Will he commit himself and the Government to deploy the same number of Trident submarines, Trident missiles and Trident warheads as the previous Government?

There is nothing ambiguous about what I say. We will deploy only the minimum number of warheads required for credible deterrence in current circumstances in our Trident submarines. If the circumstances allow reductions in the size of our capabilities, we will be prepared to make them, while ensuring that we retain an effective deterrent.

Does the Secretary of State recall the commitment given to retaining Trident—[Horn. MEMBERS: "Reading."]—while working for global disarmament clearly given in our manifesto and in "The Road to the Manifesto" and endorsed and ratified by the whole of the party? As it is a matter of considerable concern to constituents in Plymouth, Sutton, can he now confirm that the retention of Trident will not be a matter for the current defence review?

Before I call the Secretary of State, may I remind the House that we do not read parliamentary questions? This is why barracking comes from various parts of the House when this happens; it is quite unnecessary. I have said a number of times that Members should not read questions. I am sure that, during lunchtime, the questions can be worked out so that there is not always a need to refer to notes.

I think some of the barracking comes from the guilty conscience of a group of people who do not seem to recognise that, when one makes promises in an election manifesto, one is expected to keep them—but that is why they are on the Opposition Benches now, not the Government Benches.

To ask the Secretary of State for Defence if he will make a statement on progress towards NATO enlargement. [6511]

Last week's NATO summit decided to invite the Czech Republic, Hungary and Poland to begin accession talks. The alliance expects to extend further invitations in coming years to nations willing and able to assume the responsibilities and obligations of membership and as NATO determines that the inclusion of those nations would serve the overall political and strategic interests of the alliance and that the inclusion would enhance overall European security and stability.

I thank my right hon. Friend for his answer. Given that NATO membership, once granted, is irreversible, does he agree that it is vital that we manage the expectations of future applicants carefully and that NATO retains control over future enlargement?

My hon. Friend makes a valid and practical point: once NATO membership has been granted, it is an irreversible fact. As we made clear at last week's NATO summit in Madrid, NATO is a military alliance, not a political club. That has been the key to its success over the past 48 years and it is one of the main reasons why so many European countries want to become members. In the long run, further NATO enlargement will serve the interests of the alliance and this country, but decisions on candidates cannot be a matter for short-termism, politics or the pursuit of national agendas. It is a matter of acute importance, and the alliance's military effectiveness is what matters to all of us.

First, will the right hon. Gentleman ensure that, to show our friendship towards those three countries, Britain will take a leading role and perhaps be the first to sign the protocol which will appear in October and the ratification in due course? Secondly, those three countries are only observers to the North Atlantic Assembly, which is the political wing of NATO. Will he advise assembly members now to admit them as full members?

I thank the right hon. Gentleman for his helpful remarks. This is not a partisan issue and I hope that the whole House agrees that last week's membership invitation to the three countries was in the interests of the alliance and that it will be applauded throughout the House. The chairman of the North Atlantic Assembly, Senator Roth, addressed last week's summit and was strongly applauded for his point of view about the importance of maintaining the parliamentary connection with the North Atlantic Assembly over the years. It is not a matter for the Government whether the new applicant members will be instantly admitted to the North Atlantic Assembly. I dare say that the assembly itself would want to make that decision.

I welcome the agreement on NATO enlargement that was reached at last week's summit and pay tribute to the part the Secretary of State played in it. Does he agree that it was also significant that enlargement was welcomed by the President of Ukraine and that, with the charter on co-operation and consultation recently drawn up with Ukraine and the NATO-Russia Founding Act it is a significant development in the promotion of stability and security in Europe?

I strongly agree with my hon. Friend. In many ways, last week's summit will go down in history as the defining moment for those of us in Europe who have lived for the day when tension would be reduced and security enhanced. We are not talking about a small enlargement; three countries will be admitted to the alliance if the invitation is taken up. It is the biggest expansion of the alliance so far. As my hon. Friend said, side by side with that development into former Warsaw pact territory is the new agreement signed with the Ukraine and the NATO-Russia Founding Act, which was signed only a few weeks before in Paris. We live today in more secure and certain times than any other generation since the second world war.

The House will recall that, when the Prime Minister made a statement about NATO enlargement last week, he was pressed on the issue of cost several times.

Reading.

Order. It is in order for those at the Dispatch Box to read. The hon. Member for Rotherham (Mr. MacShane) has been here long enough to know that.

Does the Secretary of State recall the Prime Minister's assertion on that occasion? He said that he saw

"no reason … why there should be a real-terms increase in NATO expenditure at all".—[Official Report, 9 July 1997; Vol. 297, c. 945.]

The right hon. Gentleman really should know better. The burden of cost associated with expanding the alliance will come largely from the three new member countries because they will be expected to bear the infrastructure burdens that will be created. It is much too early to establish the full costs now, but the Government believe that they will be manageable within existing budgets. We shall see what happens in due course. In any event, that issue would not have been a moderating influence on the decision, which was taken for reasons other than cost.

In the old days, we used to call for the disbanding of NATO and the Warsaw pact. Is it not odd that, now that three former Warsaw pact countries have jumped on the NATO bandwagon and another half dozen countries want to join the queue, British taxpayers have to pay more money to enlarge NATO when our supposed enemies are enemies no more? The truth is that there will be an additional cost, which my right hon. Friend said would be borne "largely"—I think that that is the word he used—by the new member countries. That means that, despite the expansion, those countries will cost the British taxpayer more money.

I know that my hon. Friend agrees that the robust defence of this nation is imperative. Our championing of that cause is one of the reasons we have done so well and why the crowd opposite were slung out of office. The Warsaw pact has gone, partly because of the collective security and defence policies for which NATO has stood over the years. We believe in collective defence and collective security, and the expansion of NATO will provide a degree of certainty for future generations.

To ask the Secretary of State for Defence when he expects to have completed his strategic defence review; and if he will make a statement. [6512]

I expect the work of the strategic defence review to be completed around the turn of the year.

In view of the importance of the strategic defence review and the uncertainty that it is causing both to our armed forces and to our procurement industries, I hope that it will be completed by no later than the end of the year. However, how does the right hon. Gentleman's assertion fit with the Treasury's comprehensive spending review, which is due to be completed only in the spring?

It takes special brass neck and cheek for a Conservative Member to get up and talk about the uncertainty caused by our defence review. The Conservatives were slung out of office because, without conducting any strategic defence review, they cut the defence budget and cut manpower by more than one third in the past five years. We will not take any lessons from them.

In the strategic review, will account be taken of the safety of our forces, given the all too likely retaliation by the Serbs following the SAS operation? If there are to be any more such operations, would not it be wise to talk to the Russians first?

The safety of our troops and, indeed, of other British citizens serving in the former Yugoslavia, was one of our principal concerns before any decision was taken about serving indictments on those accused of war crimes. We made that clear beforehand and we have made it clear subsequently. We regard that obligation as absolutely paramount.

Are not the Government running a serious risk of getting into a muddle with two separate reviews? The Secretary of State's departmental review, which he hopes to complete by the end of the year, is foreign policy led and has scarcely any reference to resources, whereas the Treasury review, which will last a year, is Treasury led. If the Secretary of State thinks that he will complete his review by the end of the year and secure Treasury consent before the Treasury has completed its fundamental expenditure review, he is misleading himself. Will not the Treasury outgun his review?

No, because we do not operate like the previous Government. I said that we expect to complete the strategic defence review by the turn of the year. We are conducting it quickly enough to avoid the uncertainties and instabilities caused by the previous Government's savage cuts, but we will also take enough time to ensure that we do it properly and sensibly. That review will take the place of Ministry of Defence spending plans, and will offer certainty and vision to those who serve this country and its armed forces, for which they have been yearning over the past decade.

Given the Government's clear commitment to human rights, will my right hon. Friend review the procedures whereby army officers from countries with appalling human rights records are invited to buy arms at arms fairs in this country? Will he withdraw the invitation to three Indonesian generals, who were apparently invited by the previous Government to an arms fair in the United Kingdom in September?

We are always careful whom we invite to this country and about what we sell them. A major review is under way into the United Kingdom's defence sales. I hope that when my hon. Friend sees the results of that review, she will applaud it.

To ask the Secretary of State for Defence what discussions he has had with the armed forces pay review body on the subject of rents for married quarters. [6514]

My right hon. Friend the Secretary of State for Defence has had no recent discussions with the armed forces pay review body on the subject of rents for married quarters. However, my Department will, as normal, be submitting evidence for the review body's annual assessment of charges.

Does the Minister agree that, in this time of overstretch in the armed forces, the maintenance of families within their communities is a particular priority, especially in the Army? Does he further accept that there is considerable concern among many Army families that the AFPRB wants to link rents to two thirds of civilian mortgage payments, bearing it in mind that mortgage payments lead to the ownership of a house? Finally, does he agree that there is a strong case for persuading the AFPRB that, in striking a balance between pay, allowances and rents, at least within those forces that have an accompanied service policy, encouragement should be given to the wives and families who make the sacrifice of travelling with their husbands as part of the service community?

This is an extremely complex subject, in which the hon. Gentleman has a great deal of expertise. I have read his letter and pamphlet. He may be surprised to learn that I find many of his points pertinent, and one or two of them persuasive. I have therefore instructed my officials to give me advice. When they have done so, perhaps the hon. Gentleman would care to discuss the matter with me in the Ministry of Defence.

To ask the Secretary of State for Defence if he will make a statement on current expenditure on the defence procurement budget. [6515]

In the current financial year, we expect to spend about £9 billion on defence equipment.

Does the Minister accept that hundreds of thousands of jobs rely on the defence procurement budget, including several thousand such jobs in my constituency, Chelmsford, West? Is the Minister aware of the growing concern that as the strategic review is Treasury driven, the defence procurement budget is at great risk? Will he reassure my constituents and others who work in the defence industries throughout the country that during the life of this Parliament there will be no real-terms cut in the defence procurement budget, and that our armed forces will get the best equipment to enable them to protect the realm?

The hon. Gentleman may not have read out that question but it is certainly one that he prepared earlier, before he heard the response of my right hon. Friend the Secretary of State on the levels of defence spending of the previous Government. Uncertainty arose in the defence industry because of the huge cuts made by the previous Government.

Will my hon. Friend tell the House by which month the decision whether to buy seven Trident missiles from the United States in US fiscal year 1998 will have to be taken? If the decision is taken to purchase these missiles, will he confirm that the cost will be about £89 million at current exchange rates? Will he explain why the decision cannot be postponed until the end of the strategic review, thereby keeping open at least the prospect of saving a substantial sum of public money?

Again, I would have hoped that my hon. Friend had listened to the comments of my right hon. Friend the Secretary of State for Defence about Trident and our need to maintain the minimum deterrent. We shall obviously carry out an evaluation during the defence review.

Of course we are all interested in stability in the armed forces procurement programme. That being so, why did the Government confirm on Thursday, in answer to a planted question, that defence procurement projects already on contract are being considered as part of the defence review and are therefore subject to cancellation by the Treasury? Such projects must include the Eurofighter, EH101, Apache and others. Is the Minister able to name one procurement project that he can guarantee will not be cancelled?

I am extremely surprised that the Conservative party is reverting to the position that it took before the election and trying to create unnecessary alarm. I shall read the answer to which the hon. Gentleman referred. It stated that

"during the review there will be no moratorium and projects where contracts have already been placed will continue."

"projects where contracts have already been placed will continue. Decisions on major equipment programmes not yet under contract will be considered on their individual circumstances".—[Official Report, 10 July 1997; Vol. 297, c. 531.]

To ask the Secretary of State for Defence if he will list the joint projects currently undertaken with the French armed forces; and if he will make a statement. [6516]

Today, on Bastille day, I am delighted to say that defence co-operation with the French armed forces is extensive, both bilaterally and multilaterally. As my hon. Friend knows, the joint projects that we have with the French are too numerous for me to list here today.

I am grateful to the Minister for his reply. Is he aware that a year ago British warplanes flew over the Champs Elysées to salute the new Labour values of liberty, equality and fraternity? Does he agree that for three reasons—co-operation on the ground in Bosnia, procurement to create an effective European arms industry and, most important, ensuring that France plays a full and integrated role in the North Atlantic alliance and in European defence matters—Britain and France must co-operate as fully in the future as we have in the past?

Yes, indeed. That co-operation will be taken further on Wednesday when my right hon. Friend the Secretary of State for Defence meets Mr. Alain Richard. I am glad to reassure my hon. Friend that military co-operation with our French allies is as wide as ever, whether it be on the ground in Bosnia, over the skies of Iraq, through the many joint activities with the Royal Navy or through the procurement of the common new-generation frigate. Although there is no United Kingdom participation in the Bastille day parade, we are reciprocating last year's invitation in that we have invited the French air force, under the auspices of the Franco-British European air group, to participate in this year's Lord Mayor's show on 8 November. We look forward to developing even further our mutual co-operation with our French allies.

If NATO were required to defend Hungary, French forces would be involved. Will the Minister explain how NATO would defend Hungary if it were attacked? Hungary is surrounded by non-NATO members with large armed forces.

I am not entirely sure what that has to do with French integration into NATO. However, I assure the hon. Gentleman that all states that become members of NATO enter as full members, so the treaty obligations for the defence of any of those members apply to all the other members, and this country will carry out its obligations.

To ask the Secretary of State for Defence what representations he has received in respect of his policy on anti—personnel land mines. [6517]

I have reviewed a wide range of representations welcoming the Government's policy on anti-personnel land mines.

I thank my right hon. Friend for his reply. Will he reassure my constituents who have written to me on this matter that the exceptional use of land mines will be confined largely to circumstances in which the lives of British troops are at risk? Will he also reassure the House that if such land mines were to be used, we would de-mine those areas after hostilities had ceased?

My hon. Friend is absolutely right. The exceptional circumstances in which the military might ask for those instruments to be used would be limited. The decision would be taken by Ministers, and any such decision would be reported to Parliament. In such exceptional circumstances, all land mines would be plotted and would be taken up.

Will the Secretary of State again clarify the words "exceptional use"? Is he saying that, if a military commander wishes to use land mines, in the interests of the British armed forces, he will go to the right hon. Gentleman and his decision will have to be ratified by the House before he is allowed to use those mines? That seems a strange way of conducting a military campaign.

I assure the hon. Lady that there is nothing unusual about it. We would agree to suspend our moratorium on the use of anti-personnel land mines only if we were satisfied that, in a specific operation, the security of our forces would be jeopardised without them. As in many other cases, the military commanders and chiefs of staff would come to Ministers to seek agreement. Parliament would not be ratifying the decision, but would be informed of it.

To ask the hon. Member for Middlesbrough, representing the Church Commissioners, if he will make a statement on the annual amount and proportion of the Church Commissioners' revenue allocated to clergy stipends and pensions. [6500]

In 1996, the commissioners' total expenditure on behalf of the Church was £136.2 million. Of that, £32.5 million, or 24 per cent., went on stipends, and £79.6 million, or 58 per cent., went on pensions for the clergy.

I thank the hon. Gentleman for his answer, and welcome the Church Commissioners' achievement in recreating a diversified and prospering asset base in order largely to meet the cost of clergy pensions and stipends. Will he confirm that the commissioners have also achieved the objective of having 50 per cent. or more of their funds in equities? Does not the recent movement of the stock markets augur well for the ability of the Church Commissioners to play an even greater part in meeting the cost of, in particular, clergy pensions in the next financial year?

I thank the hon. Gentleman for what he has said. He will know that, in 1996, the return on assets of some £3,000 million was 17 per cent. That was a good achievement on the part of the commissioners. Income last year was £145.8 million, and the year before that it was £137 million. I can confirm that 70 per cent. of the commissioners' stock exchange assets are in UK stocks and shares. The market is buoyant, the economy is doing well and there is every confidence in the future. That is good news for the Church, for those who rely on the Church and for anyone who wants to see just how well the Church Commissioners can invest their money.

Did my hon. Friend note the silly and unreasonable court judgment that was reached at the end of last week—that clergymen do not have a terrestrial employer? It is recorded that water was once turned into wine, but not that hot air can be turned into wages. Will my hon. Friend assure us that the Church Commissioners will be a responsible employer on earth?

When I attended the Durham miners' gala on Saturday, my noble Friend Lord Dixon said that I was God's shop steward. The decision at the industrial tribunal last week related to the actual work of the clergy, and to whom the clergyman owed his duty in the cure of souls. It is not, however, for the Church Commissioners to involve themselves in the decisions of industrial tribunals. As I implied in my response to the hon. Member for Chipping Barnet (Sir S. Chapman), their work involves dealing with assets, and investment of those assets, in the interests of the Church.

To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what are the policies of the commissioners for maximising the investment income of the Church of England. [6501]

The commissioners are anxious not only to maximise investment income but to maximise the value of the assets themselves. As I said in response to an earlier question, the commissioners' portfolio has been repositioned. Of our stock exchange investments, we have 70 per cent. invested in United Kingdom shares; 10 per cent. in shares elsewhere; 11 per cent. in United Kingdom fixed interests; and a large portfolio of agricultural and other property.

I thank the Minister and take this opportunity to welcome him to his new job and wish him well. The Church of England has performed a minor miracle in rescuing itself from some unwise investment decisions much more quickly than investors normally do. Has it addressed the Budget's implications for its investments and, in particular, the effect of the removal of tax credits on dividends, which must have a severe impact? If that reduces the Church's income, what will it do to persuade its earthly or other masters to take action in its interests in the coming year?

I am grateful to the hon. Gentleman for his kind comments. I have had discussions with the Church Commissioners on the removal of advance corporation tax to ascertain its impact in future years. We may make submissions to my right hon. Friend the Chancellor of the Exchequer.

Does my hon. Friend agree that in the case of investment in land or in rights over land, such as shooting rights, a body such as the Church Commissioners should balance the maximisation of its income from those assets against other considerations, such as public access to that land?

I am grateful to my hon. Friend. It is always the intention of the Church Commissioners to maximise the value of their investments in relation both to income and to the value of the asset. Clearly, they must reconcile that aim and the impetus of their investments with wider social considerations such as the one to which my hon. Friend refers.

To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what is the policy of the Church Commissioners in respect of ethical investments. [6502]

The hon. Gentleman might like to know that the Church Commissioners have pursued ethical investment policies for longer than anyone else. Way back in 1948, the Church gave the lead when apartheid became a statutory regime in South Africa, and it banned investment in companies that were dealing with South Africa. The hon. Gentleman will be pleased to know that I was at the Synod in York on Saturday where there was a useful and constructive debate on ethical investment. The Church Commissioners are concerned to balance and reconcile their duty to maximise their investments with ethical judgments from within the Church.

I am pleased that the issue is apparently being taken seriously by the Church Commissioners. Is the Minister aware that the commissioners are investing a seven-figure sum in a company called Monsanto, which is responsible for the production of the Agent Orange pesticide which led to an out-of-court settlement of $180 million? Is he further aware that the company had to pay a fine in New York because of misleading advertising which claimed that it was environmentally friendly? Is he also aware that the company is responsible for and is at the leading edge of genetic engineering, which some of us regard as playing God with the building blocks of life? Does the hon. Gentleman think that investment in that company is consistent with the tenets of Christianity, and will he take steps to disinvest in Monsanto?

The question of Agent Orange goes back to the Vietnam war in the 1970s. It would not be appropriate in the House to go into specific cases, but if the hon. Gentleman wishes to write to me on the matter, I shall consider it. There is constant dialogue between companies that are involved in various activities and the Church Commissioners. As a so-called guru of corporate governance in the Labour party, I am interested in looking at various codes of conduct and at ethical investment and in updating them, if that is needed. I want to be sure that we reconcile the Church's ethical criteria with its right and duty to maximise its income.

As my hon. Friend knows, the Church Commissioners say that they do not invest in companies that deal mainly in arms. GEC is now the second largest producer of arms in this country and it is expanding its production. What is the cut-off point? What is the precise meaning of "mainly"?

I am grateful to my hon. Friend for her question. The Church of England's ethical investment working group, which includes a number of investing bodies and their staffs, has established contact with GEC, which has given assurances that it is in the business of defence-related equipment that is sold to the Government and to other NATO Governments. All of that is done under licence. The ethical investment working group and the commissioners continue to maintain close oversight on what companies are doing, where they are investing and their proposals. All investment decisions are taken after that close co-operation and in the light of companies' decisions.

To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what new proposals he has to improve the finances of the Church of England in relation to pensions. [6503]

We aim to maximise investment income and to secure an appreciation in the value of our assets. That is the best way in which to improve the finances of the Church of England in relation to pensions. That is the short answer to my hon. Friend. The longer answer is that, as he knows, earlier this year, the House approved a new pension scheme, which transfers the liability for future service pensions to dioceses for the majority of clergy. The commissioners will remain responsible for all past service pensions and for pension contributions into the new fund for some senior clergy whose stipends they meet directly.

Recalling the financial turmoil that the Church was in when many clergymen left it because of the recognition of the priesthood of women, has my hon. Friend made any financial assessment of what might happen if there were another large exodus of such clergymen, following weekend reports that up to a third will refuse to take the Loyal Oath if the heir to the throne remarries?

We have not considered how many clergy may resign on that basis. A number of surveys were published at the weekend. The bishops declared most of them useless. Such hypothetical questions are not of great interest to the Church in the sense that its investments and the return of income are sound. We hope to continue on that course.