§ Q6. Mr. William Hamiltonasked the Prime Minister what steps he is taking to ensure co-ordination of the efforts of the Ministers of Defence, Aviation and the Treasury, in securing reductions in miliary commitments overseas and in expenditure on the purchase of military equipment with foreign currency.
§ The Prime MinisterThose necessary, Sir.
§ Mr. HamiltonIs my right hon. Friend aware that it is now more necessary than ever to cut military expenditure overseas 686 and in particular where we are using foreign currency? Is he further aware that he would get virtually unanimous support on this side of the House if he were to announce now that the Government will not buy the F111A from the United States?
§ The Prime MinisterAs I have made clear, we are having a very thorough defence review—the most thorough review of its kind probably since the war. One of the main elements must be to get reasonable economy in budgetary expenditure and, perhaps above all, in overseas expenditure. When the review is completed we shall report to the House. Part of the review will, of course, cover not merely bases and commitments but also the question of weapons and aircraft. Until the review is completed we cannot take decisions on that. No decision has been taken yet to buy the F111A.
§ Mr. MartenIn view of the financial overseas difficulties, would not the right hon. Gentleman agree that it was absurd to cancel the TSR flying programme? Will he not reconsider this?
§ The Prime MinisterThe cutting out of a programme costing in all £750 million—
§ Mr. MartenI referred to the flying programme.
§ The Prime MinisterI am sorry. I thought the hon. Gentleman meant the original cancellation. I do not think that the testing and flying programme would have made very much difference to overseas expenditure. I would remind him that, when our balance of payments deficit last year was far worse than it is now, it was the Government of which he was a member who embarked on the purchase of American Phantom aircraft.
§ Mr. Frank AllaunDoes my right hon. Friend agree that Question No. Q6 holds the master key to nearly all the pressing problems facing the country? Does he also agree that the £400 million a year reduction by 1969–70, announced by the Chancellor of the Exchequer on Tuesday, does not mean a reduction from £2,100 million to £1,700 million a year, but is really a reduction in the projected expenditure if the previous Government's military programme had been carried out 687 unchecked and that it means not a reduction in estimates, but an increase?
§ The Prime MinisterI agree that if not this Question at any rate the Answer to it holds at any rate part of the key to the solution of not only our general economic difficulties but the balance of payments problem, because the whole of our projected deficit this year is less than our estimated total overseas Government expenditure, of which military expenditure is the greatest part. But I would not want my hon. Friend to think that it is easy to cut these totals in the way he has in mind. The natural increase, the natural escalation, in the cost per man in the Services and also the fact that such a high proportion of the total cost is represented by Service pay and is therefore a direct function of the numbers in the Services make it very difficult to make the kind of cut my hon. Friend has in mind. What our review—and it will be a painful review—involves is stopping the automatic increase in total expenditure which would have occurred year by year if we had continued the previous Government's programme unchecked.
§ Mr. SoamesWill the right hon. Gentleman make it clear that the statement by his right hon. Friend the Chancellor of the Exchequer, when he said that the intention was to reduce defence expenditure by £400 million by 1969–70, did not mean £400 million off this year's defence bill, but £400 million off the present estimates of the bill for five years ahead?
§ The Prime MinisterYes, I made that plain at Question Time a couple of weeks ago. As I said, the programme which we inherited—and I am not underestimating the difficulties of cutting it or the problems which arise—is the one to which my right hon. Friend referred and it is that which we wish to bring down by £400 million. I agree that, although we would like to do so, it is inconceivable and impossible to cut this year's programme by that amount.
§ Mr. HoosonIs the right hon. Gentleman aware that, for example, the budgeted expenditure on land and buildings alone in Aden for 1965–66 is £7 million and that this is a continuing running cost on the country? Is it not 688 necessary for the Government some day to contemplate the cutting down of our obligations overseas?
§ The Prime MinisterAs I have made clear, the review will cover questions of bases and the commitments and obligations which relate to those bases. Our first decision in this programme was substantially to reduce costly elements of expenditure. I refer to the two aircraft cuts when members of the hon. and learned Gentleman's own party, led by him on that occasion, insisted on voting against the Government's cuts in military expenditure.