The hon. Member will be aware that both pay and local overseas allowance are normally expressed in sterling and are never drawn entirely in deutschemarks. However, expressed in deutschemarks, the gross weekly pay including local overseas allowance of an average married sergeant with two children serving in BAOR was 549·36 DM in October 1976 and 532·77 DM in October 1977. This reflects a change in the Forces fixed rate of exchange on 1st November 1976.
Will the Secretary of State accept that to face Service men with an actual cut in their gross pay after a year of inflation both in Germany and in Britain will have a totally disastrous effect upon morale? Can he assure the House that he will take steps regarding the level of the local overseas allowance without waiting for next April?
I have already announced that there are to be no reductions in the level of local overseas allowance, which is calculated on the basis of comparison between the rate of inflation in Germany and the rate of inflation in this country, pending further inquiries and discussion during the next 12 months. Expressed in sterling, the local overseas allowance for the same sergeant was increased from £37·59 to £48·93, because the fall in the pound against the mark last autumn was very dramatic. Since only 70 per cent.. on average, of a soldier's pay is drawn in deutschmarks—his rent and so on are in sterling—I would not accept that any one has suffered a real loss, although I accept that the increase was offset by increased accommodation and other charges.
If my hon. Friend's inference is that we should bring the soldiers back to this country, I must refute that. The presence of British Army of the Rhine is an important part of our NATO defence policy, and, as has been frequently said, we have no plans to reduce the size of BAOR except as, we hope, agreements can be reached in the context of the Vienna discussions.
But is it not a scandal that men serving in the Armed Forces in British Army of the Rhine should be worse off in effective purchasing terms this year than they were last year? Will the Secretary of State give an undertaking, such as has been given in respect of police pay, that the Armed Forces Pay Review Body will be in no way restricted in the recommendations that it may make next April, while always bearing in mind that the Government have it in their power not to implement them fully right away?
I think it is understood that the Review Body is an independent body and that it will make such recommendations as it sees fit. It will be a question then for the Government, in the light of that report, to determine what policy should be pursued. Until we see the report, however, it is impossible to say what any reaction might be.
asked the Secretary of State for Defence what are the latest figures available for the number of British troops stationed in West Germany, the number of German civilians employed and the balance of payments cost of maintaining these troops in Germany ; what offset agreement has been arrived at with the West German Government ; and what further steps he is taking to obtain additional offsets from the West German Government.
British Forces Germany, which comprise BAOR and RAF (Germany), total some 66,000 men, supported by some 28,000 locally-employed civilians. We estimate that the foreign exchange costs of British forces in Germany in 1977–78 will be in the region of £540 million but the actual cost of our commitments depends on movements in exchange rates throughout the whole of the financial year. As my right hon. Friend the Prime Minister told my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) on 26th October, a terminal bilateral offset agreement was signed during his visit to Bonn on 18th October. Details of this are set out in Cmnd. 6970, which has been laid before Parliament by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs.
Would not my right hon. Friend agree that the offset agreement that has been reached is derisory and suggests that we are again being taken for a ride by the West German Government? Will he not accept from me that the only sort of offset agreement which is acceptable to the large majority of Members on this side of the House is one that would at least meet the great bulk of our balance of payments costs? Will he look at this matter again urgently?
As my hon. Friend knows, the negotiations were conducted by my right hon. Friend the Foreign Secretary, but I do not accept that it is a derisory agreement. In fact, I think it is a satisfactory outcome to a very difficult problem. In actual money terms, taking account of the rate of exchange, it provides in the current year, for example, £62½ million against the £13 million under the previous agreement, which ran from 1971 to 1976, and over the whole period of the three years represents in cash terms about 50 per cent. more than the previous agreement, which has now been renegotiated.
In his final answer on Question No. 9, which also related to Germany, the right hon. Gentleman said something very important, whether he intended to or not. The Armed Forces Pay Review Body made it quite plain this year that it felt totally bound by the Government's pay policy. The right hon. Gentleman said earlier this afternoon that it would not be so bound this coming year. Did he really mean to say that? If so, we greatly welcome it.