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10.19 p.m.

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley): I would like to join other speakers in congratulating both my noble friends, my noble friend Lord Blaker and my noble friend Lady Rawlings, on their quite excellent maiden speeches. My noble friend Lord Blaker spoke with great expertise and feeling on Hong Kong and China--matters about which he knows a great deal. I have to say to my noble friend that I think he has an

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advantage on both myself and my noble friend Lady Chalker in that he served in both the Ministry of Defence and the Foreign Office. We have not had such an advantage. Perhaps on later occasions we might persuade him both to open and close a debate such as this!

My noble friend Lady Rawlings spoke with the expertise of a former Member of the European Parliament and made what I am sure we all agree was a wonderful speech in a very uncontroversial manner on what was surely a very uncontroversial subject. I should just like to question one part of her uncontroversial speech. She referred to the cultural links which have existed among all parts of Europe for hundreds of years and mentioned the Norman invasion of 1066. I imagine that to some people at the time that was not the most uncontroversial of actions that might have taken place.

In opening the debate, my noble friend Lady Chalker quite rightly stressed the wide-ranging nature of the debate and the impossibility of making a comprehensive review of all foreign policy matters. One might simply put it in the terms that Nancy Mitford's fictional Uncle Matthew might have put it: there's an awful lot of abroad.

Similarly, in winding up, I am sure that no one will expect me to cover all the points that have been made. I am sure that all noble Lords will bear with me if some of the points are not covered. I can give an assurance that, as always, I or my noble friend will write where appropriate when specific questions have been asked. I join the noble Lord, Lord Judd--this is one point on which I believe we can agree--in saying how much we shall learn from mulling over Hansard tomorrow. I am sure that it will be a very useful exercise for us all. The noble Baroness, Lady Blackstone, called for further debate, particularly on the UN, and other noble Lords made other suggestions for interesting debates. I am sure that these matters will have been noticed by my noble friend the Chief Whip and will be considered by the usual channels as and where appropriate.

For a debate that covers both foreign affairs and defence matters, relatively little, dare I say, was said on defence. I should like to make a couple of fairly brief points on matters relating to my own department.

First, it is right that I bring the House up to date on the main developments of the defence costs study, which was referred to by the noble and gallant Lord, Lord Craig of Radley, and by other noble Lords. Since I addressed the House in late July there have been certain developments in the debate about defence. I shall not go over all the background again except to re-emphasise that none of the proposals emerging will in any way reduce the operational effectiveness of our forces. Indeed, many will facilitate improvements in capability. I ask my noble friend Lady Park to look at the effective capability of our Armed Forces rather than the simple figures in terms of what we spend.

Since July we have been involved in a period of formal consultation on the Front Line First report with trade unions and others with particular interest in the various proposals. Obviously, because of the comprehensive nature of that report, we allowed an extended period of three months for the consultation,

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which came to an end last month. As well as consulting on the Front Line First report itself, we have also issued a number of consultative documents giving details of individual proposals. As and when consultation on particular proposals comes to an end, we shall consider with the greatest care all the comments received before taking final decisions. We intend to make those decisions public as they are made rather than brigade them into a single announcement. Only in that way can we minimise the period of uncertainty--again this was a concern of the noble and gallant Lord--that our staff may have to face.

I turn to one other development in relation to Front Line First which was referred to by my noble friend Lord Vivian; namely, the study into defence intelligence reported at the end of July. My noble friend will understand why we shall not be making public all the measures that we propose to implement. The main one is for a major reorganisation of the central defence intelligence staff within the department. We have concluded that there is scope to increase efficiency and reduce costs through reforms similar to those which we intend to introduce in other areas. On a wider front, we have set in place comprehensive arrangements to implement each and every proposal emerging from Front Line First, subject of course to the outcome of any consultation. I can give an assurance to the House that I and ministerial colleagues in the department will remain highly committed and closely involved in this vitally important process of change.

I understand that any changes can give cause for concern, as the noble and gallant Lord quite rightly stressed, and that that concern can have major effects on the morale of our Armed Forces. But I certainly hope that the reassurances given by my right honourable friend the Secretary of State on the need for a period of stability will go some way towards helping.

Perhaps I may say a few words in response to the noble Earl, Lord Attlee, on a matter that concerns both of us; that is, the reserve forces. The noble Earl will recognise that reserve forces legislation was not referred to in the gracious Speech. As the noble Earl knows, new legislation is required to permit us to make more flexible use of our reserves in post-cold war circumstances. In the light of the fact that we are not able to bring forward legislation this year, I can now confirm that we plan to publish that draft legislation on the reserve forces in 1995, allowing time for detailed consultation on its provisions and amendment, if required, before the Bill is introduced to Parliament. However, I have to say to the noble Earl that I do not think it is likely that that will give us an opportunity to introduce legislation on this subject in the coming year.

I wish to say a few words about European issues, particularly about the own resources decision and the legislation that will be involved. The noble Baroness, Lady Blackstone, wanted to know whether the Bill could be passed without amendment or whether amendments would be possible. I have to stress to the noble Baroness--this point was picked up by my noble friend Lord Cockfield--that the whole Bill must be passed without amendment. The United Kingdom Government gave an international commitment that they

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would so do and they must implement that commitment. I should remind the House that both Houses of Parliament welcomed the outcome of the Edinburgh Council, on which the own resources decision will be based, and the Bill quite simply implements that agreement and our commitment to it. The Bill will be introduced in another place tomorrow and, as I said, will implement the decisions of the 1992 Edinburgh Council, which was a rigorous settlement designed to meet the needs of the Community until the end of the century while taking into account what member states can afford. It will result only in a modest increase in the size of the Community budget.

I should like to stress the facts of what that implies. The own resources decision implies an increased cost to the United Kingdom of £75 million in 1995-96 rising to £250 million in 1999. It preserves the United Kingdom abatement which has saved us some £16 billion since 1984. It keeps our increase proportionately smaller than those of most other member states--we are now slipping down the net contributor table--and it was much better than it could have been. As noble Lords will remember, the Commission originally wanted an own resources call-up to reach a total of 1.37 per cent. of Community GNP by 1997 rather than the agreed figure, as my noble friend Lord Cockfield reminded the House, of 1.27 per cent. in 1999. If we had gone for that higher figure it would have meant an extra £8.5 billion in 1997, instead of the £1.75 billion in 1997 and £3.5 billion in 1999 under the Edinburgh agreement.

I should also point out that increases in Community spending are now slowing. The own resources decision settlement provided an average increase in Community commitments of some 3.3 per cent. per year in real terms from 1992 to 1999 as against what we have seen between 1987 and 1992 of some 5.3 per cent. I believe that the stories which are circulating which suggest a sharp rise in our net contributions between 1994-95 and 1995-96, as a result of the Edinburgh agreement, are somewhat misleading. They are in fact wrong. Implementing the own resources decision will have some effect, but it is a modest one. The underlying trend of our contributions may be upwards but that reflects an increase in our GNP growth relative to other states.

Perhaps I may say a word or two about the intergovernmental conference in 1996. I can assure my noble friend Lord Cockfield that we shall have a most positive agenda for that conference. We shall obviously want to encourage greater flexibility, enable enlargement, develop CFSP, fight fraud and entrench subsidiarity. I can assure all noble Lords that subsidiarity, whatever the noble Lord, Lord Hooson, might think, is in fact working. There were 185 registered proposals in 1990; 75 in 1993; and so far only 39 this year. We shall continue to work for greater financial discipline and we shall continue to strengthen the role of the national parliaments. We shall certainly oppose any weakening of the power of the Council of Ministers, the merging of the pillars or removal of the United Kingdom opt-outs. I certainly do not expect us to be isolated and I certainly expect plenty of support for our views.

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I would like to reassure the noble Baroness, Lady Blackstone, and my noble friend Lord Beloff, that we are not outsiders in the European Community. We are not the pariahs that she seems to suggest that we are and we have actually achieved a great deal by our negotiating and methods of dealing. We do not always lose the arguments. I can give a long list of negotiating successes including the enlargement--which is something which we originally proposed--the GATT Uruguay round, the Edinburgh own resources decision; subsidiarity (which I have also just mentioned), and the social protocol where I believe the noble Baroness and I will simply have to agree to differ on opting-out. I believe that it was a great success for this country. There was also the 1988 Budget discipline decision.

Lastly, the noble Baroness pressed me on when and if we shall join monetary union. She seemed to imply that I might be evasive in responding on that point. I can assure the noble Baroness that I am not going to be evasive. Put very simply, it is a matter for Her Majesty's Government, as the noble Baroness knows, and Parliament to take a decision if and when they have to. It is not an issue which is before us now. I say to the noble Baroness that I suspect that it looks unrealistic for 1997. That is certainly not just the view of Her Majesty's Government. The president of the European Monetary Institute said just that on 14th November.

I turn now to the question of aid and the Pergau arms sales. I start by re-stressing all the points made by my noble friend Lady Chalker and underlining everything she said on aid and our aid record. I have to repeat to the House in particular that I do not believe that I can emphasise enough that there is quite simply no link between aid projects and defence contracts in Indonesia, Jordan, Oman or in any other markets which noble Lords care to mention. Allegations of that sort are quite simply untrue. They are based on spurious correlations between provisions of aid and arms sales. I totally reject the allegations made by the noble Baroness and others on this issue that our aid projects are linked in any way to arms sales.

If I may, I should like to say a word or two about arms sales. The noble Lord, Lord Mayhew, suggested that we should be trying to remove arms sales from all parts of the world. The theme of the speech of the noble Lord, Lord Judd, was that somehow they were intrinsically wicked in themselves and we should not be involved in them. I have to say - I think that many noble Lords recognise this - that all states have a right to self-defence, recognised by Article 51 of the United Nations Charter, and that countries need defence equipment to exercise that right. The United Kingdom's exports of defence equipment are responsible. We consider applications for licences to export defence equipment on a case-by-case basis against established criteria, including internationally agreed guidelines. The criteria include human rights. Perhaps I may also stress that they would include questions such as excessive military expenditure. They include such matters as regional stability and the economic and technical capacity of the recipient state. We do not export equipment that is likely to be used for internal repression.

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As the noble Lord, Lord Judd, was prepared to admit, the United Kingdom wants to see more and greater transparency and responsibility in conventional arms transfers. The UN register of conventional arms was set up after a personal initiative of the Prime Minister. We are currently involved in multilateral discussions on new arrangements to promote transparency and responsibility in conventional arms transfers. I have to say that I believe that much of the recent media interest in the United Kingdom's defence exports has been both ill-informed and hysterical.

Perhaps I may also briefly re-emphasise some points about our aid programme. We maintain a very substantial aid programme, whatever the noble Lord, Lord Judd, says. It is now the sixth largest in the world and has risen by some 10 per cent. in real terms since 1987-88. The aid budget is some £2.2 billion. In 1993 our aid was 0.31 per cent. of GNP, but that is still above the average of all the other OECD donors. More importantly, some 80 per cent. of our bilateral aid goes to the poorest developing countries, a higher proportion than that of any other G7 donor. Perhaps I may also refer the noble Lord to private investment, which can have equally beneficial effects as aid from governments. The UK's direct private investment in developing countries is consistently around half the EC overall total, and for 1992 was estimated to be some £1.7 billion.

As I said at the beginning, it would be very difficult to cover all the subjects that have been raised; there have been a great many. But perhaps I may say a word or two about the United States lifting its arms embargo on Bosnia. I sensed general agreement in the House on that and I was grateful for the support of the noble Lord, Lord Mayhew, for Her Majesty's Government's policy here. Obviously, I understand the worries that it raises in relation to our general NATO relations. We have seen a very changed environment in NATO over the past few years and the removal of the certainties of a few years ago will mean that we shall have to work harder to ensure that NATO continues to serve our interests as it has done so well over the previous 40 years.

As regards the effect of the US policy shift on Operation Sharp Guard, I have a sneaking feeling that the noble Lord slightly overblew its significance. We are certainly confident that the operation in the Adriatic can continue to be effective, sad though the US decision is. I think that I should say further and very simply in terms of our own policy that, if there was a total lift of the embargo by the United Nations, there would be no way in which we could continue to keep our forces in Bosnia and the former republic of Yugoslavia. Put very simply, there can be no lift-and-stay policy.

I appreciate that there has been a vast array of matters that I have not addressed in the time available this evening. I know that the noble Lord, Lord Mayhew, would like me to develop further his arguments on nuclear proliferation, but perhaps I can do that by correspondence. I have not touched upon Palestine, Hong Kong, Cuba, the Ukraine, Kashmir or the many points relating to human rights. In view of the time, I hope that noble Lords will bear with me if I now move on and say that I should like to end by paying tribute,

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as my noble friend Lord Wade of Chorlton did yesterday when moving the humble Address, to the men and women of our Armed Forces.

As I made clear when I opened, the debate has been wide-ranging and extensive. It has covered a vast array of matters. It is right that on occasions we should try to cover all matters relating to foreign affairs and defence in one evening. There will be further opportunities to debate these matters, focusing in greater detail on specific concerns. Nevertheless, I believe that on occasions such as this we should remember just how much our security and future depend upon the men and women who serve in the Armed Forces.

Our Armed Forces are deployed throughout the world on a wide variety of dangerous and difficult jobs. It is obviously not possible to mention them all, and by touching on just a few I wish in no way to disparage the duties and actions of others in other parts of the world. I shall start by mentioning those in Bosnia in the former Republic of Yugoslavia as they face their third winter in that theatre where their achievements in humanitarian relief have been dramatic and for which - dare I say it? - they have not received the praise or coverage of the press which they deserve.

I should mention also those in Northern Ireland where we have now seen soldiers serve in dangerous conditions in aid of the civil power for some 25 years. It is their largest peacetime commitment. They have prevented countless terrorist attacks. They have saved the lives of many people, both Catholic and Protestant, at great risk to themselves. Above all, they have, with the help of the community, prevented terrorists on both sides from achieving their aims through violence. Let us hope that the peace process can continue and that that pressure on the Armed Forces can in time be reduced.

Let us also remember those in Rwanda where some 600 military personnel have made a major contribution to UNAMIR, as well as all the others engaged in United Nations roles of one sort or another. There are more than 7,500 in Cyprus, Iraq, Kuwait, Georgia, Rwanda and the former Republic of Yugoslavia.

The noble Baroness, Lady Blackstone, asked how many we could currently place at the disposal of the United Nations. The noble Baroness will obviously not expect me to answer that question, and I do not believe that I can. Each case will be considered on its merits. I can say that our record speaks for itself. Those 7,500 soldiers engaged, as I said, in what one might refer to as blue-beret operations or in support of United Nations Security Council resolutions, show how much the UK is committed to the support of UN operations.

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