Tory MPs were warned yesterday that they were putting at risk tax cuts and further defence orders, with the risk of jobs in their constituencies, if they rebelled against the pounds 1.5bn sale of married quarters for the armed forces.
David Clark, Labour's defence spokesman, said: "It really is sad that the Conservatives put tax cuts before the defence of Britain."
The pressure applied to Tory rebels appeared to be working as 13 Conservative MPs withdrew their names from a Commons motion opposing the sale. Michael Portillo, the Secretary of State for Defence, was mounting a vigorous counter- attack to stop the scheme being blocked. He briefed backbenchers individually to break the back of the threatened rebellion, and he made it clear at a press conference at the Ministry of Defence, that defence orders could be affected.
"If the sale did not go ahead, the Government would lose the money in the coming year," he said. Filling the pounds 1.5bn hole in the Treasury's finances would be a "collective decision" for the Cabinet, he said. But he did not rule out the possibility that defence contracts could be postponed and MPs were being warned the Chancellor would lose room for tax cuts.
The pressure on the Chancellor was increased by the announcement in a written Commons reply that the cost of the beef compensation and slaughter programme would be pounds 2.5bn, reduced to pounds 2bn after a European Union rebate. That will be met out of the reserves.
Mr Portillo said: "It is a problem which the Government should not have to face because this policy is well-founded for the forces, for the economic strategy and for the philosophy of the Government."
Some of those who withdrew their names said they had signed the Commons motion under false pretences. After being assured that the rents of the armed forces would not rise steeply as a result of the sale, they removed their names from the list of 65 supporters.
They included right-wingers such as John Townend, the chairman of the 92 Group of Thatcherite Tory MPs, Nicholas Budgen, a leading Euro-sceptic, and those on the left of the party, including Peter Bottomley, Sir Jim Lester and Andrew Rowe. The "charm offensive" by Mr Portillo to win back support has included Euro-sceptic Tory MPs who have been shunned in the past by ministers. "My office received a phone call from the Defence Secretary's office saying he was prepared to meet me," said one rebel, whose name is staying on the list.
One of those who backed down said: "I've not been nobbled. I was worried about the rents, and they have assured me on that. I think he should have shown a bit more flexibility by saying he would consult the families. If he had done that, he would have avoided a lot of this trouble."
The armed forces families, and the senior members of the armed forces are fighting the plan to sell about 57,000 houses to a private bidder on a 200-year lease. There will be a review after 25 years, after which the purchasers can develop the estates, unless the MoD objects.
It is expected Mr Portillo will announce the sale of the estates to a Japanese bank. He said yesterday that security on the bases would not be compromised; management remains with the public sector.
Opponents are planning a rearguard action, which could still block the deal. The Government could face defeat in the Lords on the report stage of the Housing Bill on 11 July with a Tory amendment to delay the sale for a year to allow further consultation. It could come to the Commons to be overturned on 22 July, but Labour is warning the Government it will lose.