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Lord Burnham: My Lords, I thank the noble Lord for that reply. I am sure the fact that the ferry is operating out of the Chancellor of the Exchequer's constituency has nothing to do with the matter. Nevertheless, this is a payment to a ferry company which is in competition with P&O in particular but also with the Danish ferry company DFDS. P&O has just paid £200 million for two new North Sea ferries. Where is the fairness in acting in this way towards one company and in another way towards P&O?

Lord Filkin: My Lords, P&O was an unsuccessful bidder for the new scheme out of Rosyth. In practice, the Government's reasons for supporting the scheme were, first, the strength of opinion in Scotland, from both business and the public, that there was a need for a direct ferry route from Scotland to the Continent, and, secondly—and fundamentally from the Government's point of view—the indication that a remarkable amount of heavy lorry traffic would come off the roads as a consequence. The Scottish Executive has forecast that 430 heavy lorry trips will come off the roads, largely in England. The operator will have to reimburse the taxpayer fully if it does not achieve the required level of traffic.

Lord Elder: My Lords, does my noble friend agree that the enormous reduction in the weight of traffic on the roads between Scotland and the north-east of England, as well as producing an environmental benefit, will also assist other road users who find the congestion in that area extremely worrying and difficult? Does he further agree that there is ample evidence of sufficient trade to keep the new route in the North Sea going, providing welcome competition while not seriously threatening any other operator?

Lord Filkin: Yes, indeed, my Lords. That is substantially how the Government see the matter. Clearly, no company welcomes additional competition. However, in recent years ferry traffic on the North Sea route has been increasing by 7 per cent per annum. So we are talking about a buoyant market.

The environmental benefits are costed by a standard and accepted method; namely, by examining any consequent reduction in traffic, accidents, pollution, congestion, and so on. The benefits forecast of £36 million compares with the cost of the scheme at just under £11 million. So there is a high pay-back ratio in the scheme.

Baroness Scott of Needham Market: My Lords, were my noble friend Lord Mar and Kellie in his place, he would, I am sure, welcome the restoration of the historic links between Scotland and the rest of Europe. It is precisely the substantial reduction in lorry miles which makes the awarding of a freight grant such an important part of transport strategy in that part of the

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country. Do the Government have any plans to be similarly generous to, for example, the Argyll to Antrim route, which is currently a reserved matter?

Lord Filkin: My Lords, "Not to my knowledge" is the short answer, although, clearly, if a proposal comes forward from a ferry operator and a port, the Government will be happy to consider it.

Lord Strathclyde: My Lords, I am slightly confused as to why the noble Lord is answering the Question. He said a moment ago that the project was being funded by the Scottish Executive. If it was a decision by central government, why is it not being paid for by central government? If it was a decision of the Scottish Executive and being paid for by the Scottish Executive, why do the Government feel that they are accountable to this House?

Lord Filkin: My Lords, under the Scotland Act 1998, any grant for a transport linkage between Scotland and somewhere outside Scotland is a reserved matter for the UK Government. The decision therefore has to be taken by the UK Government, but it is perfectly in order for the Scottish Executive to reimburse the UK Government for that expenditure if they wish to do so.

Lord Berkeley: My Lords, is my noble friend aware that the company that is going to be running the ferry service between Rosyth and the Netherlands recently won the European ferry service of the year award and that it will therefore provide excellent competition for the other operators across the North Sea?

Lord Filkin: No, my Lords, I was not so aware, but I am pleased and relieved to hear it.

Baroness Hanham: My Lords, will the Minister be kind enough to tell me what similar subsidies or grants are being given to ferry companies operating out of other parts of the British Isles—out of England, Northern Ireland and Wales?

Lord Filkin: My Lords, to my knowledge, this is the only such scheme at this stage. Up to now, such grants have tended to be used more for inland waterways rather than for high seas ferry routes.

Anti-Ballistic Missile Treaty

2.51 p.m.

Lord Wallace of Saltaire asked Her Majesty's Government:

    Whether American abrogation of the Anti-Ballistic Missile Treaty implies a change in British policy towards United States use of intelligence and early warning facilities under United Kingdom sovereignty, and towards their future development.

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The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, last December, the United States, exercising its treaty rights, gave Russia six months' notice of its intention to withdraw from the Anti-Ballistic Missile Treaty. The United States and Russia continue to discuss a future strategic framework for relations based on mutual confidence, openness and co-operation. Our position on the use of intelligence and early warning facilities remains unchanged. We have received no requests from the United States for the use of UK facilities for missile defence purposes and it remains premature to indicate how we would respond to any specific request.

Lord Wallace of Saltaire: My Lords, in thanking the Minister for that reply, I note that the United States and Russia have not yet come to any agreement on what might replace the ABM Treaty. Does the Minister accept that our arrangements with the United States have to operate within the framework of international law and treaties and that if the position of the United States towards that framework begins to weaken, a number of questions will arise? Is he happy that the arrangements for Menwith Hill and Fylingdales are still covered by the NATO status of forces agreement of 1951 and that there has been no recent report to this House or to the other place reflecting the enormous changes in the use of those facilities since 1951? Is he aware that there is now a planning application before Harrogate Council for a third large radome to be erected at Menwith Hill, which I think must be for a space-based infra-red system for use in anti-missile systems? Even if the United States Government have not yet asked the British Government, the British Government might perhaps notice that it is about to be erected, as I notice the first two when I go past them.

Lord Bach: My Lords, RAF Fylingdales and RAF Menwith Hill have performed functions vital to the security of the United States, the United Kingdom and NATO for many years and will continue to do so regardless of how the United States Government seek to proceed with missile defence. We believe that the NATO status of forces agreement of 1951 still applies. The new radome that the noble Lord asked about will update equipment currently in use at the base and is unrelated to missile defence.

Lord Burnham: My Lords, is not the situation the reverse of that stated by the Minister? If the American Government abrogate the treaty, might they not be unwilling to share information with the United Kingdom, as they have done in the past?

Lord Filkin: No, my Lords. First, the United States Government have not abrogated the ABM Treaty. They have given Russia six months' notice of their intention to withdraw from the treaty. The treaty makes explicit provision for such a course of action, as Russia has acknowledged. The Americans have also made it clear that they will not violate the treaty while

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they are bound by its terms. There will be no difference in the relationship between the United Kingdom and the United States on intelligence.

Lord Chalfont: My Lords, does the Minister agree that we are paddling in dangerous waters? Will he confirm to the House, in case we should be contemplating any quixotic gesture, that the balance of intelligence between this country and the United States is weighted heavily in our favour? If that exchange should cease, our national interests, not theirs, would be damaged.

Lord Bach: My Lords, whichever way it is balanced, it is clear that it is in the mutual interests of our closest allies and ourselves that intelligence should continue between us.

Lord Vivian: My Lords, does the Minister agree that, for all the talk of national missile defence leading to a nuclear arms race, in fact the reverse has happened and that both the United States and the Russians are reducing their nuclear arsenals following America's plans for missile defence?

Lord Bach: Yes, my Lords, I agree with the noble Lord. There is no doubt that the new relationship between Russia and the United States and the new relationship between Russia and NATO are of huge potential benefit to world peace.

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