§ Q5. Mr. Zilliacusasked the Prime Minister how far it remains the policy of Her Majesty's Government, as set forth in the White Paper on the economic situation of 26th October, 1964, and by the Chancellor of the Exchequer on 11th November, 1964, that in order to pay for its economic and social policies defence expenditure must be cut below the then current (1964) level of £2,000 million a year, even on the assumption of a regular 4 per cent. per year rate of growth of the gross national product.
§ The Prime MinisterMy hon. Friend appears to have misunderstood the statements to which he refers. Our policy is, and has been, to keep defence expenditure by 1969–70 within a level of £2,000 million a year at 1964 prices.
§ Mr. ZilliacusAs the increase in the gross national product has barely topped 2 per cent., is it not now necessary to go far below £2,000 million a year at 1964 prices to meet the present crisis? Will the Prime Minister rest assured that he will have massive support on this side of the House and in the country for really drastic cuts in defence expenditure?
§ The Prime MinisterI am not sure that my hon. Friend's deep concern in this question is as much with the growth rate as with the defence expenditure. On all these matters which have been raised by my hon. Friend, I ask him to await the statement which I hope to make tomorrow.
§ Mr. PowellDo I understand from the Prime Minister's first reply that he confirms that there is no intention to reduce defence expenditure below the budgeted figure of £2,000 million, as at 1964 prices, in 1969–70?
§ The Prime MinisterI said that our policy is, and has been, to keep defence expenditure within a level of £2,000 million a year at 1964 prices, not to increase it by £300 million or £400 million a year, which is the right hon. Gentleman's policy.
Mr. HellerIs my right hon. Friend aware that if this expenditure is not reduced and, at the same time, there are proposals for massive deflation leading to unemployment, this will meet with very great opposition on this side of the House?
§ The Prime MinisterI can only note what my hon. Friend says without accepting any of the implications of his question.
§ Mr. PowellWill the Prime Minister make it quite clear whether the figure of £2,000 million for 1969–70 is a budgetary figure, an intended figure of expenditure or a ceiling below which the Government intend to fall?
§ The Prime MinisterThis was explained in the defence debate. It is set out in the defence review that we intend to bring it down ,to £2,000 million, which is a formidable undertaking in view of the rate of escalation that was going on before. Of course, if we find effective savings without weakening our defence posture, we would reduce it still further.