HC Deb 30 June 1966 vol 730 cc2176-7
29. Mr. William Hamilton

asked the First Secretary of State and Secretary of State for Economic Affairs what estimate he has made of the effects of British military expenditure overseas on the implementation of the National Plan.

The Under-Secretary of State for Economic Affairs (Mr. William Rodgers)

As my hon. Friend knows, the Government have decided to restrict the Defence Budget in 1969–70 to the equivalent of the total in the 1964–65 Estimates and within that total to bring about an absolute reduction in that part which is incurred overseas. This is taken account of in the National Plan.

Mr. Hamilton

Is it not a fact that the purchase of military aircraft from America was undertaken after the publication of the National Plan and, furthermore, the meeting of the targets in the National Plan was based on an estimated national growth of about 4 per cent. which we are nothing like achieving? If this is the case, how can we expect to meet the targets in housing, hospitals, schools, and so on, unless we make further reductions in defence expenditure?

Mr. Rodgers

I take a more optimistic view than my hon. Friend of the prospects of achieving the targets in the National Plan. But in any review of the plan which takes place from time to time, we shall take account of all new factors which have arisen, including any relating to defence expenditure.

Sir C. Osborne

On what factors does the hon. Gentleman base his more optimistic view of the future?

Mr. Rodgers

I hold a more optimistic view than that of my hon. Friend the Member for Fife, West (Mr. William Hamilton) that the targets in the plan might not be achieved. There is a very good prospect that by 1970 we shall do as well as we expected.

Mr. Zilliacus

Is it not a fact that in the Government's report on the economic situation of 26th October, 1964, it was said that we should not be able to pay for our economic and social policies unless we cut defence expenditure below the then sum of £2,000 million, even after the increase in the gross national product had attained 4 per cent. a year. As we have barely attained 2 per cent. and are still maintaining defence expenditure at the level of £2,000 million, how does my hon. Friend expect our plan to succeed?

Mr. Rodgers

The achievements of the targets in the plan are related to things other than simply defence expenditure, but, as I have said, we have this question very much in mind and we shall endeavour to make sure that what we have to spend, for other and defensible reasons, on defence overseas will be allowed for in the National Plan.

Mr. Barber

Is the hon. Gentleman really saying that in the light of the most recent figures published he thinks that the target for the increase in industrial production will be reached?

Mr. Rodgers

I am saying that I think that these targets will be reached. We recognised that in the earlier part of the plan period it would be more difficult to achieve a high rate of annual growth.