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Mr. Paul Boateng (Brent, South) : The appointment of Lord Justice Bingham to head a committee of inquiry into this sorry and unhappy affair is a welcome one.
Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak) : On a point of order, Mr. Deputy Speaker. In a short debate, is it right that the summings up should continue for half an hour? This is meant to be a private Members' day.
Mr. Deputy Speaker : It is the convention that, when a Front Bench spokesman seeks to catch the eye of the occupant of the Chair, preference is given to him. I hope that the hon. Member for Brent, South (Mr. Boateng), who is speaking from the Opposition Front Bench, will not take up so much time that no other Back Bench Member will be able to contribute to the debate. I hope that other Back Bench Members will be able to take part in the debate before the time limit expires.
Mr. Boateng : The appointment of Lord Justice Bingham to head an inquiry into this sorry and unhappy affair is a welcome one. It is, however, a matter of regret that the Opposition's call for an inquiry was not met
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sooner. It is also a sad and sorry affair that there is about the inquiry, and the Government's surprising reticence in relation to its terms of reference, suspicion on our part--indeed, more than suspicion--that we are about to see created a smokescreen behind which the Government intend to play a game of pass the ministerial parcel.Mr. Boateng : I wish that the hon. Gentleman would refrain from making comments of that nature from a sedentary position. He will have time to make his own speech.
There is concern on our part that we shall see the creation of a smokescreen behind which there will be played a game of pass the ministerial parcel, and that the Government will use that as a cover for inactivity on matters that it is possible for them to take action on now.
I raise one such matter immediately with the Economic Secretary because he is aware that it has been raised with the Government on several occasions since the BCCI affair came to light. It relates to the role of auditors and whether there should be a duty, not merely a right, placed on auditors to report to the regulating authority--the Bank of England--when they have a suspicion of irregularities, dishonesty or fraud. That is a reasonable demand, but it has been consistently resisted by Ministers. Will the Minister now say that he does not intend to continue to resist that modest request, and that he will not allow the appointment of a commission of inquiry to be the cause of delay in that matter?
Will the Minister confirm that the inquiry can consider the following questions? Do current regulatory procedures concerning both sound banking practice and fraud provide adequate protection for the consumer? Should there be an independent supervisory body for the banking industry? Should banks have a statutory responsibility to insure customer deposits? Should this country propose amendments to the European Community first banking directive to establish more effective supervision within the single market? Finally--this relates to a matter that I raised with the Minister earlier-- will the inquiry consider the role played by the BCCI auditors in the light of their responsibility to present a true and fair view of the company's accounts, and what changes should be made in that regard? Those are five simple matters, and we seek an assurance that the inquiry can take them on board within its remit. If it does not have a sufficiently wide-ranging brief, and if it is not equipped with the power not just to summon Ministers and civil servants but to sub poena others who do not fall within either category, we must wonder whether the inquiry can adequately do the work that I imagine the whole House wants it to do.
It is important to ensure that there is a clear sign, at the earliest possible stage, of exactly what Ministers knew and when they first knew it. There is a concern not only about when the Treasury and the Chancellor knew the facts--either the present Chancellor or, importantly and significantly, the former Chancellor, now the Prime Minister--but about the role of the Department of Trade and Industry. As the responsible body with regard to the
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Investment Management Regulatory Organisation, was the DTI aware of the concerns of that body about the approval of BCCI's application ? If the DTI was aware of those concerns, of the failure of IMRO to register BCCI for its purposes, and of its reservations about the people operating the investment management division within BCCI, why was that not considered sufficient warning as to the probity of the bank and the fitness of those who managed it ? Should not that have sparked warning lights at the Treasury and the Bank of England ? There is more than a suspicion that there was a breakdown in communications between Government Departments, which of itself could only have put depositers and the general public still further at risk.There is no reason why there should not be--and I should like an assurance that there will be--an interim report produced by Lord Justice Bingham. That would allay the very real concerns about the potential for delay and for removal of material from the public domain which should be in it as quickly as possible. We do not want the report merely to be promised tomorrow and tomorrow and tomorrow. There is a question which I am sure the Minister appreciates is important to those within and outside the house who witness our proceedings. What can be done in the interim for the deposit holders and the staff ? What is the current status of the practical steps promised by the liquidators and the Bank of England to ameliorate the plight of those people in so far as that is possible ? Many small business people want an assurance that their needs and worries will not be ignored in the inquiry. The hard-pressed staff of BCCI await some reassurance, in so far as it can be given, by the liquidators and the Bank of England. We hope that it will soon be forthcoming. Several Hon. Members rose--
Mr. Deputy Speaker : Order. I remind party spokesmen that the debate arising out of the Consolidated Fund Bill is one of the most precious opportunities for Back Benchers to raise matters in the House.
2.41 am
Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak) : The hon. Member for Brent, South (Mr. Boateng) did not like my saying, "Rubbish," from a seated position, so I shall say it from a standing position. It was rubbish to suggest that the Government were reticent about holding the inquiry, or that the inquiry is being held to hide something. The one certainty of our judicial system is that no Lord Justice will be used or abused by any Government. As my right hon. Friend the Prime Minister said, the Lord Justice will call whom he wishes in order to get at the truth for the House, as it has demanded. Surely that is right.
The hon. Member for Leicester, East (Mr. Vaz) referred to what the Governor of the Bank of England was meant to have said. Referring to the debate in the House yesterday--Monday--today's Financial Times published a statement by the bank :
"The governor certainly did not intend to give any impression that the chancellor is briefed other than in general terms on major supervisory developments and issues. As the PM indicated in the House today, the governor would not have told the chancellor about individual reports on individual cases".
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It was said in the House yesterday that the Chancellor must have known of every page in the accountants' reports--[ Hon. Members :-- "No."] That was said by the respected Leader of the Opposition. BCCI has 48,400 accounts. Some 36,000 of them have less than £1,000, so those depositors will get most of their money back ; a further 9, 500 have less than £20,000, so those depositors will get 75 per cent. back ; then there are 3,100 large accounts, of which the local authorities will be the biggest losers. There have been two debates on the position of the local authorities. One should not repeat the comments which have been made, because other hon. Members wish to speak.If one thinks about it, this is the simplest thing in the world. I have a list of all the banks that the Bank of England authorises. It does not guarantee their accounts. Those banks range from those with deposits of £100 million down to those with deposits of £20 million. Any local government treasurer who thinks that a bank with £100 billion and an AAA rating is exactly the same as the BCCI, with a minus-C rating, is not fit to hold his job. If anyone thinks that for a treasurer in the Western Isles to borrow £17 million to lend to someone else to gain per cent. more interest is not irresponsible, it is hardly surprising that so many Labour-controlled authorities go up the spout.
The one certainty is that everyone has a fiduciary capacity to be responsible with other people's money. We may be sorry for the people who chose such idiots to be their local authority treasurers, but it is no good saying that it is the Government's fault and that the Government should bail everyone out.
Mr. Tim Smith : I referred earlier-- [Interruption.] The hon. Member for Makerfield (Mr. McCartney) refused to give way to me when I sought to draw the attention of the House to the minutes of the meeting to which he referred. This is an important matter. The representative of the Bank of England, Mr. Beverly, addressing the local authority associations which were present at the meeting, emphasised :
"The list did not say anything about the relative creditworthiness of the institutions or that they could not fail. That was an assessment the local authorities, and other depositors, had to make."
That was passed on by the Association of Metropolitan Authorities in a circular three days later to its members when it said : "It cannot be assumed that all institutions on the list are equally creditworthy."
Mr. Beaumont-Dark : I agree with that point. The list is clear and it is there for good reason. Anyone who wants to lend or borrow money can look at that list. If the Opposition are saying that when there is a list this long of category A and B banks, one should lend to an inferior bank, they do not know much about local government finance.
2.46 am
Mr. Alex Carlile (Montgomery) : Lord Justice Bingham would have been the first choice of many of us for the task that he is about to undertake. It is unfortunate that the Prime Minister was unable to confirm this afternoon that the Lord Justice will have the power to compel witnesses or to take evidence abroad. I hope that we shall hear from the Economic Secretary tonight that that will be the case.
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I was criticised by the Prime Minister when I intervened this afternoon for referring to the toytown banking laws of Luxembourg. I make no apology for repeating that allegation. My recollection of Noddy is that he was particularly good at keeping secrets, even from Mr. Plod.In December 1988, Professor Richard Dale, the consulting editor of the Financial Times Newsletter and Financial Regulation Report , wrote an article in which he suggested that the BCCI holding company structure was designed to bypass the regulators, that Luxembourg's secrecy laws were inviting criminal activity at BCCI and that for those reasons, as well as the absence of a lender of last resort, BCCI could collapse. Lord Justice Bingham will probably not be looking at the differences between European banking laws and regulation, but I hope that, in the light of what has happened, the Government will.
The banking laws of Luxembourg are similar to those of the Cayman Islands. They guarantee secrecy. That means that they are calculated to be attractive to tax evaders, fraudsters and money launderers. Luxembourg can nevertheless claim to wash its hands of the inevitable consequences of having such lax laws.
BCCI's corporate structure, which consisted of an unregulated Luxembourg holding company and two main operating subsidiaries incorporated in separate offshore secrecy havens, Luxembourg and the Cayman Islands, was purpose-built to confuse the regulatory authorities. That structure made nonsense of the Basle concordat, which was revised in 1983 specifically to take account of "the principle that banking supervisory authorities cannot be fully satisfied about the soundness of individual banks unless they can examine tha totality of each bank's business worldwide through the technique of consolidation."
I ask that there should now be a searching review of the international bank regulatory framework. A number of points are already clear. First, the principle of consolidated supervision which was formally adopted but then neglected by the group of 10 countries in 1983 must be rigorously enforced. Secondly, further efforts must be made to combat bank fraud, and that should mean greater emphasis on unannounced on-site examinations by regulatory authorities. Thirdly--I acknowledge my debt to Professor Dale for these views--and most importantly, the present regime under which offshore banking services tout for business by offering secrecy, fiscal and other regulatory inducements needs to be overhauled. After all, what conceivable benefit does a banking centre in Luxembourg or the Cayman islands confer on the global economy? Offshore banking is a legitimate business, but it should be conducted in centres that have the financial and regulatory infrastructure to host it responsibly. Part of the responsibility for what has happened with the BCCI lies with Governments who have been prepared to condone such a lax regulatory structure. I hope that the Government will allow Lord Justice Bingham to take that into account ; but above all I hope that he will be able to decide whether there has been a failure of a reasonable duty of care, whether by the Government or the Bank of England. If there has been such a failure, I hope that the Government will undertake to pay compensation to the hard-pressed account holders.
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2.50 amThe Economic Secretary to the Treasury (Mr. John Maples) : I am sorry that not everyone who wished to speak has been able to do so, but I wanted to try to answer as many as possible of the points that have been made.
The hon. and learned Member for Montgomery (Mr. Carlile) raised an interesting and difficult point--the regulation of multinational banking organisations. He was right that this one would seem to have been deliberately organised to make it difficult to supervise. There are lessons to be learned from that and we shall look hard at the second banking co- ordination directive and at supervision in Europe after the end of 1992.
The hon. Member for Brent, South (Mr. Boateng) said that he was suspicious about the terms of reference of the inquiry. I am not sure why, as they are perfectly clear. I shall read them out, although that has already been done at least twice. They are :
"To enquire into the supervision of BCCI under the Banking Acts ; to consider whether the action taken by the UK authorities was appropriate and timely ; and to make recommendations."
As my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said, it is unlikely that Lord Justice Bingham will allow himself to be used as a smokescreen. Lord Justice Bingham will be able to make recommendations to us about banking supervision. I have been asked whether I am generally happy with the powers under the Banking Act 1987. In general, we are happy, but if there are lessons to be learnt from the inquiry, we shall take them on board. The hon. Member for Leicester, East (Mr Vaz) asked about an interim report. I doubt whether an interim report would be appropriate in this case. I hope that the job can be done fairly quickly so that such a report will not be necessary, but it will be up to Lord Justice Bingham to publish an interim report if he feels that to be necessary.
I have already dealt twice with questions about what and when Ministers knew. The Chancellor has dealt with them once, as has the Prime Minister. A series of events was involved, and the best place to bring them together is the inquiry. All records and Ministers will be available to Lord Justice Bingham so that he can elicit all the detail of what Ministers knew, and when.
It was interesting that the hon. Member for Leicester, East should raise the subject of auditors. In the Committee stage of the Banking Bill, which became the 1987 Act, the Opposition spokesman, Dr Oonagh McDonald, said that she still found enormous problems with auditors being expected to inform the Bank of England's supervisors about the conduct of business by the bank of which they are auditors. It is fascinating to see the ground shifting now.
Mr. McCartney : She lost her seat.
Mr. Maples : She knew quite a lot about banking. It is the professional duty of auditors to inform the supervisory authorities if they are aware of anything that they believe is wrong. The hon. Member for Brent, South shakes his head, but he is wrong. I did not say that this was a statutory duty. I was going to say that their professional conduct includes the duty to do so. It is also clear from the supervisory guidance issued by the Bank of England under the Banking Act 1987 that the auditors should do so. If that became a problem, we could consider a statute, but many things happen outside statute and if they work
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satisfactorily they should be allowed to do so. I do not think that it has been suggested that the auditors withheld information which should have been given to the supervisors.The hon. Member for Leicestershire, East posed many questions, but as there is little time I shall have to deal with them quickly. He asked what could be done for depositors and staff. The depositors can be compensated under the deposit protection scheme, which cannot be brought into action until a winding-up order has been made. That was today adjourned for eight days. We and the bank hope that the order will be made in eight days' time, although interestingly the representatives of the depositors and the shareholder and the liquidator today resisted that. Perhaps the depositors need to decide where their interests really lie because the deposit protection scheme cannot be activated until a winding-up order is in place. The Deposit Protection Board has already started to write to all 57,000 eligible depositors enclosing the necessary claim form. The process is going ahead even though the winding-up order has not yet been obtained. We are moving on that as fast as we can and I am conscious of the need to continue to move fast. I assure the House that I shall keep an eye on that.
I understand that all members of staff have been retained as employees until the end of July and will be paid by the liquidator for their employment during that period. A winding-up order must be passed before redundancy and compensation can be paid. It may be in the interests of staff for the order to be passed before the end of the month so that they can receive the appropriate payments. Several hon. Members spoke of local authorities, and in that context my hon. Friend the Member for Beaconsfield (Mr. Smith) read out a pertinent passage from the minutes of a Treasury meeting. I shall not repeat my hon. Friend's point because he made it well. No one can consider that a list of the more than 550 banks licensed by the Bank of England should carry a Government guarantee. First, the potential liability for public expenditure on such a scheme would be absolutely astronomical.
Secondly, if every banking organisation carried out Government guarantee, we might see on a smaller scale what happened in the United States. People would tend to invest in banks offering slightly higher rates of return. Of necessity, that higher return is earned by taking greater risks. A guarantee scheme would remove the moral hazard and shift the risk to the Government. There would then be no incentive to invest in a responsible bank paying a slightly lower rate of interest, because exactly the same guarantee would apply to all banks. No Government would be prepared to give such a guarantee to every depositor.
Some hon. Members referred to the commissions paid by local authorities. Local authorities are supposed to be sophisticated investors and could certainly have asked the brokers to state their commission. If the authorities were advised by their brokers to take certain actions they may have legal remedies, but that depends on the circumstances of each case. Local authorities are probably looking at that. I cannot offer much comfort on that score and, as I have said, it would be invidious for the Government to try to pick and choose between different creditors. Local authorities will have to live with the problems that they have created for themselves. Those problems may require more attention than it would be appropriate for me to
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give, and questions about such matters should be addressed to Ministers at the Department of the Environment.Mr. David Shaw (Dover) : Will my hon. Friend deal with timing? Would it have been reasonable for the fraud to be detected earlier and for the bank to decide to close earlier? Or does he think, as some people argue, that it should not have been closed at all? Have we struck the right balance? Were the seven days during which the Chancellor, the Prime Minister and the Governors of the Bank of England knew about the situation well spent? It is quite an achievement to close a bank of that size in seven days.
Mr. Maples : My hon. Friend has made some good points. One of the misconceptions that many people have is that the first thing that a banking regulator would do if it got adverse information about a bank that it was regulating would be to close it down. In fact, the first thing that it would do would be to try to correct the problem. We have seen the awful problems that are created by the closing of a bank. It has to be the weapon of last resort. It is a serious step to take, and there has to be the evidence to support taking it. If there is any alternative, it should be pursued.
Two cases have been put to me this evening and on previous occasions. One is that the Bank of England closed BCCI too soon ; the other is that it closed it too late. When a bank's licence is revoked, there are always arguments that it should have been done sooner, or that it should have been done later.
Mr. Vaz : In the short time that the Minister has left, will he direct his comments to the points that I raised about the negotiations which are going on with the sheikh, because many people would like to see the Government supporting such negotiations?
Mr. Maples : I cannot deal with all the hon. Gentleman's points, but as he has raised that one, I will deal with it. The best outcome, from everyone's point of view, would be an orderly rundown, with the co- operation of the major shareholder in a way which minimised depositors' losses. The major shareholders have proved themselves to be responsible, and we hope that they will co-operate in that rundown. The negotiations are between the Luxembourg liquidator and the Abu Dhabi authorities. It is for them to conduct the negotiations, but we should be happy if they had the outcome that the hon. Gentleman envisages.
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Obtaining a winding-up order would not stop that process. If my memory of company law is right, if a winding-up order was obtained but the bank was put back in a financially sound position, it would still be possible for the order to be lifted and the winding-up process to stop. One has to go through with the order to get the deposit protection scheme activated.The hon. Gentleman asked me why the sheikh and the Abu Dhabi authorities were not informed before the licence was revoked. The Bank of England came to the conclusion that the fraud was so deep and pervasive, and the losses so extensive, that there were no circumstances in which it would be possible to allow the bank to stay open, and nothing that the shareholders could have done, by way of changing management or injecting further funds, would have enabled the Bank of England to allow the licence to continue. The chances of putting together the sort of package that the hon. Gentleman envisages are remote, but I hope that it is possible. I would support such a move. If there is anything that anybody feels that we could do to facilitate that, we would do it, although the responsibility is with the main liquidator--the Luxembourg commissioner--who I understand is having talks with the Abu Dhabi authorities.
The hon. Gentleman asked why there had been no arrests. It is a bit early for that. The Serious Fraud Office has only had the papers since 5 July, and these are complex frauds, as will emerge if any cases come to trial. The hon. Gentleman asked whether the inquiry would have judicial authority. The answer is no. It will be set up in exactly the same way as the Lord Justice Taylor inquiry into the Hillsborough disaster, and the Wolff inquiry into prisons, not as a judicial inquiry. It is an inquiry into the supervisory authorities', the Governor's and the Bank of England's role in this.
The Prime Minister has made it clear that Ministers and Government officials and papers, and Bank of England officials and papers, will be made available to the inquiry without restriction. He went so far as to say that the Government would place no restrictions on what the inquiry had access to. If it becomes necessary for the inquiry to cast its net a little wider, we shall have to see whether it is necessarsy to give it further powers, but I hope that it will not be.
I am sorry that I have not been able to deal with all the points that the hon. Gentleman raised, but I will try to address the remaining ones in a letter.
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Nuclear Deterrence
3.3 am
Mr. Derek Conway (Shrewsbury and Atcham) : I start at this late hour by apologising to my right hon. Friend the Member for Epsom and Ewell (Mr. Hamilton), who will reply to the debate on behalf of the Government, and to the hon. Member for Rhondda (Mr. Rogers), who is Opposition spokesman on this subject. The lateness of the hour is not of my choosing, and, no doubt like them, I look forward to being in my bed ere too long.
I welcome the opportunity to debate, however briefly, the nuclear aspect of our defence policy, particularly as the conventional forces are almost certain to dominate the two-day debate that the House has scheduled for its return in October, and rightly so. The Government's proposals for the conventional forces, particularly the Army, are extremely dramatic and therefore need to be discussed in considerable detail.
This is a welcome opportunity for us to consider nuclear policy, albeit briefly. It surely warrants our consideration.
Although I am pleased to see that one or two Opposition Members are present, I am a little surprised that the Opposition Benches are not packed. Here is a chance for the Opposition--and, indeed, the rest of the country--to discern the Labour party's policy, at least for this week. There can be no doubt that there is a considerable element of shifting sands in Labour's nuclear policy.
I have taken a brief look at a document that is, I am sure, dear to many hearts : Labour's 1987 general election document, entitled "Britain Will Win". In fact Britain did win, because Labour did not. Page 15 of the document, commenting on Britain's place in a modern world, explains why Labour fought the election on a unilateralist ticket--which was, of course, rejected by the British people. Two years later, Labour produced another document, "Looking to the Future", which spoke of a dynamic economy and a decent society, strong in Europe. That document was more vague, and-- perhaps cleverly, from a political point of view--managed to avoid the subject of unilateralism entirely.
I suppose that, by 1991, the lure of the red boxes and the chauffeur-driven Montego had proved just a bit too much. It is now rather difficult to find out where the Opposition stand. However, the good old Guardian came to our help last week. As hon. Members will know, last week saw a lively exchange- -in the spirit of modern, free debate--between the right hon. Member for Manchester, Gorton (Mr. Kaufman), Labour's foreign affairs spokesman, and its transport spokesman, the hon. Member for Kingston upon Hull, East (Mr. Prescott). We were granted the interesting spectacle of the pair slugging it out, courtesy of a national newspaper. The hon. Member for Kingston upon Hull, East was quoted as saying that his right hon. Friend--he may not have used that title--had
"sown seeds of confusion and dillusionment".
All that appeared in the wonderfully supportive Guardian . There is confusion, not in the Tories' challenge but within the ranks of the shadow Cabinet. We can always rely on the Tories' friend, the hon. Member for Birmingham, Ladywood (Ms. Short), who described the contribution of the right hon. Member for Gorton as
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unwise and unprincipled, and continued in a similar vein. We should be lost without her, and the wonderful supply of quotes with which she provides us.Even more interesting is the fact that the Leader of the Opposition himself has seen fit to withdraw from CND, leaving Bruce Kent as one of his beleaguered candidates--destined, no doubt, to be permanently in opposition. I feel slightly sorry for the hon. Member for Clackmannan (Mr. O'Neill), who is regarded by many--and rightly so--as a very nice man, but who simply does not feature in the shadow Cabinet. Perhaps, given the perpetual vote for a woman, his only way into the ranks would be to become a transvestite. I do not mean that cruelly ; he is a good guy, but he has a hard wicket to fight in his own party, where confusion reigns. The situation is not helped by the leadership.
My party presented a very different history to the electorate, and it continues to endorse the same policy : a policy advocated by my right hon. Friend the Member for Finchley (Mrs. Thatcher), who, when the USSR deployed its SS20 missiles, was adamant--sometimes in the face of considerable criticism within NATO and our European allies--that Britain would deploy the American cruise missile. There was no messing about ; she warned the Soviets that, if they did it, we would match it. She meant what she said, and the Kremlin knew it. I think that it is fair to say that the Soviets understand strength. Perhaps that is why they treat the Leader of the Opposition so discourteously : they also understand weakness. I am convinced that the progress made in eastern Europe will be judged by history to owe a good deal to the steadfastness of my right hon. Friend the Member for Finchley, who played a substantial part in the arms reductions that are now taking place, and which we hope that all sides will welcome.
It is, I suppose, right for the House to consider--even at 3.8 am--whether there is a continuing role for military force in inter-state relations. I would argue that there is. We still live in a very unsettled world. Who could argue against the proposition that Europe is still far from stable? Undoubtedly the threat of nuclear war is colossal and way beyond anything that high-explosive weaponry could achieve, although those who have witnessed high-explosive weapons say that the devastation they cause is substantial, if not on the scale of a nuclear war. Even a dictator like Saddam Hussein understood the threat, and refrained from chemical bombing during the Gulf war.
The east-west balance has prevailed for 40 years, but who can judge just how far a conflict would escalate amid the confusion of a major war? There would always be the doubted intention, the doubted action. Most of all, there would be the certainty of ability. That certainty of ability has enabled us to each the stage that we have reached in all the international negotiations.
I would argue that nuclear weapons are still a much-needed cornerstone of our defence policy. We all wish the scale to be reduced, and we should like the capacity reduced. I hope, however, that most of us see the sense of keeping and modernising our nuclear defence arsenal. If anyone is tempted to think that the Soviet economy is now down to a brush and a couple of ponies, he should look at table 4 of the defence statement that the House will consider in October, which still shows a substantial balance in favour of the Soviet forces in terms of nuclear arms.
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To look on the bright side, the intermediate nuclear forces treaty was concluded between the USSR and the USA in May. United Kingdom involvement in that has ceased. All the ground-launched cruise missiles were withdrawn in December 1988 from RAF Molesworth, and in March of this year from Greenham Common. I am sure that the House will have considered the defence estimates and the statement, particularly paragraph 319, which shows that the Government welcome the strategic arms reduction treaty, agreed between the USSR and the USA. The Washington summit last June saw that framework agreement signed. Undoubtedly there is a will on all sides to reduce the burden of such a large arsenal.The question remains, however, whether it is right for the United Kingdom to pursue the Trident programme as our national system. My party believes that that is the case and will continue to stand by it, whereas the Opposition, as far as I am aware--perhaps we shall be told differently in this debate--are still committed to its removal by the year 2000, although there seems to be some doubt about that in the shadow Cabinet. The debate provides them with an opportunity to set the record straight.
I suspect that much ground could be covered during this short debate--not only nuclear testing and nuclear proliferation but alternative defence strategies--but this is neither the time nor the place to do so. What remains the case is that, as with French socialists and capitalists alike, the Conservative party has always understood the uncertain world in which we live. Perhaps we are slightly more cynical or, as we would prefer to call it, more realistic, but our policies have been prudent and will continue to be prudent for the long-term integrity of our national security. The general public know that. They considered that fact in 1983 and 1987 and stood by us. I believe, therefore, that, as the public know us, they trust us. It is right that they should continue to do so. 3.12 am
Mr. Bob Cryer (Bradford, South) : This is a very interesting and important occasion. We are talking about the nuclear deterrent. There have been massive changes in eastern Europe. The Soviet bloc is no longer there. The threat that it posed was never there in the first place, but it was used as an excuse to build up our nuclear forces, at very great expense and sacrifice by the British people. Justification for the nuclear deterrent was shot to pieces, to use a military phrase, by the right hon. Member for Plymouth, Sutton (Mr. Clark) who said, in effect, in a debate in this House in 1981 that the Soviet Union had been in decline ever since that high point of 1948 at the time of the Berlin airlift, and that it was beginning to lose control over various parts of the Soviet empire. The right hon. Gentleman's highly thoughtful speech was entirely contrary to the general trend of speeches in that debate. It was remarkably far-sighted, because the right hon. Gentleman, who is now Minister of State for Defence Procurement, said that the Soviet Union was not so strong as successive Conservative Governments had claimed, that it had serious weaknesses, and that it did not pose a threat. I agreed with the right hon. Gentleman, but our expenditure on nuclear weapons kept increasing. We embarked on the Polaris programme in 1962 and are now faced with the Trident nuclear missile programme.
The nuclear deterrent is a myth, because the Polaris programme is not what it used to be. To varying degrees,
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all the Polaris submarines are suffering from cracks in their cooling systems which make them dangerous in operation. Only one of the four-boat system is available for use. In May, Greenpeace produced a report entitled, "Bring Polaris Home". The Ministry of Defence did not reply to the questions that that study posed. Greenpeace expressed serious concern that HMS Resolution, Renown, Repulse and Revenge have serious defects. They were launched in 1966 and were designed to last for only 20 years, but they are still in use. A cloak of security prevents us from getting answers to the questions that were asked in that important report, which suggests that in reality we can hardly manage to put one Polaris boat to sea. Over several years, we have trusted the Soviet Union. Rather curiously, the Central Electricity Generating Board and the Scottish Electricity Generating Board had a uranium enrichment contract with the Soviet Union which was concluded in 1975. Some 170 tonnes of uranium per annum were supplied in the form of uranium hexafluoride. It returned from the Soviet Union as enriched uranium or as tails--that is, depleted uranium. The enriched uranium was needed for incorporation in civil reactor fuel. If it is further enriched, it can be used for bomb material.The Government told us that the Soviet Union was a powerful organised nuclear threat to civilisation, yet they authorised a contract between a publicly owned body and the Soviet Union to enrich uranium--the basic process for producing nuclear weapons.
Moreover, the Soviet Union did not keep the uranium that the CEGB and the Scottish generating board supplied. It was perfectly honest and scrupulous in its dealings with this most powerful and dangerous material. Did the Government intervene to stop the contract? Apparently they did not regard the Soviet Union as such a threat that they felt that they had to stop the contract. It was a quite an irony.
If we are to maintain the fiction of the nuclear deterrent, someone has to be prepared to use it. If it is not going to be used, it is not a deterrent, but a complete myth.
The Minister will confirm that the Government and the Prime Minister are prepared to press the button. That means that the Minister, apparently an affable and quite innocent man, is prepared to become party to one of the biggest acts of mass extermination in human history. He and the Government are prepared to embark on killing on a scale that will make Hitler and Pol Pot look like amateurs. They may say that they do not want to do that, that it would be a failure of the nuclear deterrent if they did so, and that they would desperately wish to avoid doing it, but at the end of the argument, they will say that they are prepared to do it. I reject that attitude. I reject a relationship of our country to any other country based on the threat of mass extermination.
Other countries share my view. I do not mean countries with communist or even left-wing Governments. Let us consider Canada which is under a Conservative Government. At Heads of State meetings, the Prime Minister of Canada talks with a fellow Conservative when he meets the British Prime Minister. Canada has a Conservative Government and a Prime Minister who would ally himself with the range of values and attitudes that the British Government claim to support. But Canada will not have nuclear weapons on its soil.
It is extraordinary that our Government believe, uniquely, that it is necessary for our country, virtually
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uniquely, to have nuclear weapons, whereas other Conservative Governments reject that attitude. They are not alone. In NATO, there are countries that reject the deployment and use of nuclear weapons, such as Denmark and Norway.If we decided, as I believe that we should, to get rid of our nuclear weapons, we should not be isolated ; we should be joining the majority of nations. How do we know that? When I was first re-elected to the House in 1987, I raised the question of the United Nations nuclear non-proliferation treaty with the Minister. I vividly recall that he said that this country was not a signatory to the treaty. He had to write a letter to me subsequently, however, to say that he had examined the matter and discovered that this country was indeed a signatory to the treaty.
The "Statement on the Defence Estimates 1991" makes it clear that the Government regard the nuclear non-proliferation treaty as being extremely important. I quote from paragraph 323 of the statement, which has not been debated by the House yet :
"The NPT Review Conference in September last year demonstrated the wide support for the NPT's objectives, with agreement being reached on most issues. We regret that consensus on a final document was blocked by the Mexican delegation, but the Conference nevertheless achieved a full review of the operation of the Treaty, and demonstrated its continuing importance as a cornerstone of world security."
The Minister of State for the Armed Forces (Mr. Archie Hamilton) : I remember the incident, when I had been in office for a very short time, extremely well. I actually said--the hon. Gentleman will remember this-- that the United Kingdom was not covered by the part of the non- proliferation treaty that he was going on about. I had to write to the hon. Gentleman to provide a full explanation of that. I never said that we were not a signatory to the non-proliferation treaty.
Mr. Cryer : I do not have the Hansard quotation in front of me, but I accept the Minister's correction. It is virtually what I said anyhow. What is important is that that demonstrates the priority that is given in the big fat briefing document that Ministers get when they get into office. The civil servants say to them, "This is your brief, Minister--this is what you've got to learn as a background to your Department." At that stage, the nuclear non-proliferation treaty was obviously not one of the headlines.
The quotation from the current "Statement on the Defence Estimates" shows that the Government, a signatory to the important nuclear non-proliferation treaty, recognise its importance for the preservation of the planet. Under clause 6 of that treaty, the nuclear power signatories are called upon to negotiate in good faith to get rid of nuclear weapons from their soil. The Soviet Union and the United States, both signatories, have done that because they have got rid of intermediate nuclear weapons with the removal of cruise missiles.
The United Kingdom has done nothing. What is worse is that the United Kingdom has embarked on replacing the Polaris nuclear weapon with the more powerful Trident nuclear weapon. I believe that we are therefore in breach of United Nations nuclear non-proliferation treaty.
In our document "Meet the Challenge : Make the Change", we make it clear that we support the United
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Nations treaty. Any Government who support that treaty are committed to getting rid of nuclear weapons by virtue of clause 6. It is worth noting what the move from Polaris, creaking and defective though it is, to Trident will mean. In the Polaris system, there are three warheads per missile and 16 missiles per submarine. In the Trident D5 programme, there are still 16 missiles per submarine, but the number of warheads per missile has leapt to 14. Therefore, the total number of warheads per submarine is no longer 48 but has shot up to a maximum of 272, or, on average, 224. Under the Polaris system the four submarines can carry a total of 192 warheads, but under the Trident D5 programme the submarines will carry 896, with a possible maximum of 1,088. The yield per warhead is 200 kilotonnes in the Polaris system and between 100 and 200 kilotonnes in the Trident system. The total yield for all the missiles is 38,400 kilotonnes in the Polaris system and between 89, 600 and 217,600 kilotonnes in the Trident system. In the case of Polaris, the maximum number of targets is 64, but Trident offers a maximum of between 896 and 1,088.The Government are intent on developing the Trident missile and installing it in submarines. Where will those dreadful weapons of mass extermination be targeted? It would be interesting to hear the answer from the Minister, but it is a secret. We are not allowed to know which section of the planet the Government propose to subject to mass extermination. What an extraordinary and absurd set of circumstances.
We believe that those weapons will be aimed at the Soviet Union. Just last week, a lot of Conservatives were grovelling around Mr. Gorbachev when he visited the Terrace. One of my hon. Friends wanted to know what Mr. Gorbachev was doing with all those Conservatives. After all, they are the very people who have argued that Mr. Gorbachev and all the other Soviet citizens should be the target of our nuclear deterrents. Considered in those terms, it is absolutely outrageous. The Prime Minister is toadying around Mr. Gorbachev and inviting him here while at the same time pointing a pistol to his head and saying, in effect, "If I determine that the Soviet Union is a threat, I shall kill your men, women and children."
The Government are supposed to be concerned with green issues. What sort of green country would this be if the button were pressed and those weapons were used? It would not be a country in which Greenpeace would get the Conservative vote--it would be a radioactive cinder heap. There would be nothing left. It would be the end of civilisation as we know it. Yet that scenario is implied when the Government or anyone else talk about deploying nuclear weapons. It is morally unacceptable and outrageous.
The United Nations non-proliferation treaty is supported by 141 non-nuclear nations--two of which the Government do not
recognise--which have said that they will not deploy or manufacture nuclear weapons. Those nations have had a number of review conferences. The statement on the defence estimates indicates some of the difficulties. They are not spelt out very clearly, but the document says :
"We regret that consensus on a final document was blocked by the Mexican delegation".
That happened because the signatories to that treaty are a bit fed up with the nuclear signatories. The vast majority of the nations of the world-- those 141 signatories--have
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