§ 9.17 p.m.
§ Mr. John Wilkinson (Bradford, West)I am glad to be able to use this occasion of the debate on the Consolidated Fund Bill to raise the relative escalation of manpower, equipment and training costs on the defence budget revealed in the Vote on Account 1971–72 and in the Supplementary Estimates, House of Commons Paper No. 231.
The Supplementary Estimates provide us with a most welcome opportunity to raise important practical matters of defence planning, the extra costs of pay and allowances and pensions, plus the extra cost of equipment and training. Although the defence Vote no longer bears most heavily of all the Votes upon the Budget, it is still the supreme cause of our parliamentary existence. Although we vote about 75 per cent. more funds for social security than for defence, all our provisions for welfare, health, hospital and educational programmes presuppose national security. Therefore, I am grateful for this opportunity to discuss these Supplementary Estimates.
So far in this Parliament we have discussed defence in breadth twice, but in depth only once in the debate on the Army Estimates, which was drastically curtailed. The debate tonight gives us a 988 chance to exercise scrutiny on a few overruns of specific defence programmes
I am particularly delighted to see my hon. Friend the Under-Secretary of State for Defence for the Royal Air Force in his place to wind up the debate. This debate is similar to the one in which he and I participated on 21st July, 1970, on the Consolidated Fund Bill when we discussed similar issues of pay and allowances in the light of the proposal to implement the Third Report of the National Board for Prices and Incomes on Pay and Allowances. Now the position is somewhat different. We have had another Supplementary Estimate in the meantime dealing with the pay and allowances of civilians to the tune of £26 million of extra public money, and now we are presented with a third Supplementary Estimate to the tune of £48 million.
The interesting thing to observe in an analysis of this sum is that about 40 per cent. of the £48 million consists of pay and allowances, and, much more disturbing, £14½ million goes to the pay and allowances of civilians, a greater sum, in fact, than is allocated for defence equipment and related stores. For those items, we are asked to vote a mere £14 million. The retired pay and pensions of Servicemen constitute about £5¾million. These figures exemplify a longstanding trend, and we should look at them closely to try to comprehend their full significance.
In the years since 1964–65, a biennial study of pay and allowances for civilians and for Servicemen shows a very steeply and alarmingly rising trend. In 1964–65, the total defence budget constituted about £2,000 million. In 1970–71, the projected expenditure is £2,280 million. In other words, in a period when the value of the £ has gone down by some 25 per cent. in real terms, in terms of demand upon resources defence is taking very little extra. In fact, we are spending relatively less on defence.
But on pay of civilians, we are spending almost twice as much as we did in 1964–65, and pay of Service personnel has gone up from £392 million in 1964–65 to £464 million in 1970–71, which is not such a large increase proportionately.
While I understand the arguments for relying as much as possible on civilian 989 manpower to fulfil certain non-essential functions in headquarters and other administrative places, I still find it alarming to see the proportion of the defence budget devoured by pay and allowances escalating constantly.
In 1964–65, the percentage devoted to pay and allowances was 37 per cent. Now, according to the Secretary of State in another place, it is as high as 52 per cent.—at a time when weapons costs have escalated faster than ever before, when we are rightly expecting that the diminution in force levels should be more than offset by an increase in fire power and capability in weapons systems. This is hard to understand, when we are spending not only less in real terms on defence but an ever-decreasing proportion of the defence budget on equipment procurement and research and development.
A very interesting article in the winter 1969 issue of the R.A.F. Quarterly shows that in 1963–64 pay of Servicemen and civilians constituted 34 per cent. of the whole; by 1969 it had gone up to 40 per cent. Production and research and development, on the other hand, in 1964 constituted 40 per cent. In 1969 it had gone down to 36 per cent. In other words, there had been a total shift of emphasis and resources from research and development to pay and allowances.
The reasons for this are well understood. In the first Supplementary Estimate, when we introduced the military salary, we made it an axiom that the Armed Services should try to compete directly with industry for manpower, and in this Supplementary Estimate we are seeing a continuation of the same process. However, it has been carried out at the expense of procurement programmes.
This risk was underlined in the Secretary of State's speech in another place, when he spoke of the difficulties that this created, and said that both major items, equipment and manpower, were subject to their own pressures. Increasing complexity naturally forced up equipment costs and, he said, it cost between two and five times as much to re-equip an Army unit now as it did 10 years ago, even discounting inflation. At the same time, the g.n.p. had risen by only a little over one-quarter. Manpower costs had also risen. He emphasised this central dilemma to our defence planning, but he 990 very much begged the question of where the solution lay. Before we accept this Supplementary Estimate, my hon. Friend should suggest some of the avenues which the Government are pursuing to seek a way out of this difficult impasse.
I come to some of the specific programmes mentioned in this Supplementary Estimate and, in doing so, I shall draw a few conclusions from them. On page 18 we find that training expenses require an extra £540,000 for payments to other Governments for air training facilities in Sardinia. I see that there was no provision for this expenditure, but the House will understand the fundamental reasons for this. In Sardinia there is obviously uncongested airspace away from airports and airways, the weather is better, with good open ranges and an opportunity to collaborate with our N.A.T.O. allies and to carry out transit flights across N.A.T.O. countries. These are significant factors.
However, I urge my hon. Friend to consider, before we vote this extra sum, whether there could be savings by utilising existing facilities more fully. I refer, in particular, to the air to ground range at R.A.F. Pembrey, at present used by No. 229 Tactical Weapons Unit at Chivenor. It will, if present plans continue, be gradually run down and there is talk of using it as an artillery range, which the local inhabitants regard with great disfavour.
I suggest that before we vote this extra sum my hon. Friend should say whether the R.A.F. could continue to use this British facility, especially when the Royal Naval Air Station Brawdy is to become the Operational Conversion Unit for "Jaguar", and that will require a great deal of weapon training and gunnery facilities. I hope, therefore, that we will use these British facilities as much as possible.
On page 26 we see some items of equipment expenditure. The first is airframes and aero-engines. I note that there is to be a diminished provision for airframes and purchases of aircraft, to the tune of about £4 million. I hope that this is not as significant as it looks, and I am sure that my hon. Friend will be able to give me an assurance about it. As I have emphasised, we look to an expanding equipment programme to 991 offset deficiencies or necessary reductions in manpower.
More significant, perhaps, is the question of aero-engines, with the substantial extra provision asked for of £19,400,000. The reason given is increased prices and variations in delivery dates. That sounds rather like the old Rolls-Royce syndrome to me, and I should like an explanation. It is a very substantial item, and it is largely because of that item that any extra expenditure on equipment is called for at all, for on the other side of the Estimate one finds substantial reductions planned for in certain equipment programmes.
Next, electrical and electronic equipment, instruments and so on. Obviously, a high degree of sophistication in avionics is increasingly called for in modern weapons systems and aircraft. I imagine that this extra item is largely the result of inflation, a prevalent factor in our economy, but I should like my hon. Friend to spell it out in more detail because it comes to about £9½ million. It may mean that there are, perhaps, serious development problems in a few programmes, Navattack systems and the like.
On research and development, we have an extra £2½ million or thereabouts to find. I do not look askance at this. On the whole, I welcome it, for there has been a tendency in recent years to reduce expenditure on research and development. Even my hon. Friend himself, winding up on the first day of our Defence Estimates debate, made a slightly ominous remark, which I well understood, when he hypothesised on the possibility of buying equipment off the shelf from abroad to reduce the proportion of our defence budget which went on research and development.
That was something which the last Government did, to their discredit, because it was a severe blow to the British industry and also because it had serious strategic implications in making us reliant upon an overseas supplier. I should not like that mistake to be repeated, and I take this extra provision as an indication that it will not be. This is an important matter, for research and development constitutes about 10 per cent. of the defence budget.
992 Now, on the question of equipment, what about the savings made? There are two vessels which were deferred or not ordered. This saved £2½ million. But we are cutting back on equipment when we should, perhaps, be expanding our equipment programme. There are large reductions in planned expenditure on both weapons and ammunition, due to inflationary pressures, price variation, production delays, delays in ordering, and the like. I am not sure that at this moment, with Ulster on our hands and always the possibility of an escalation there, we should be making these particular savings.
On engineering equipment, we make savings of £5 million, and on plant and machinery in the dockyards and elsewhere, £700,000. So there were reductions in equipment programmes which I believe to be significant. Perhaps my hon. Friend can tell me about them.
I go on about this matter repetitiously, perhaps, but not, I trust, tediously, because we have before us the example of the Canadians who also have an all-professional defence posture, and only 13 per cent. of their defence budget goes on equipment. That is very much the redttctio ad absurdunz, to which, I fear, the logic of our policies may ultimately lead us.
I broadly accept these Estimates. I do so with a certain amount of disquiet, though not a major anxiety, because the broad emphasis of the Government's defence planning is absolutely right—more on the front line, a greater determination to meet commitments, an expansion of reserve forces, particularly in the Territorial Army. All those are admirable concepts, but I ask my hon. Friend the Under-Secretary before we accept the Estimates to say whether the Government will examine the real benefit that a citizen force could give this country, that is, a system whereby we did not have such an ever-increasingly large proportion of our defence budget, devoted to pay and allowances.
Defence targets for the next four years are fixed, and the rate of growth may not be as high as we would all expect. Inflation may continue to present us with a problem. In that situation it is essential that we look to a novel and radical policy, perhaps based on the Swiss or 993 Israeli patterns of operation, which will relieve us of this dilemma and make a positive contribution to our defence planning.
§ 9.36 p.m.
§ The Under-Secretary of State for Defence for the Royal Air Force (Mr. Antony Lambton)My hon. Friend the Member for Bradford, West (Mr. Wilkinson) began by saying that although we have had the Army Estimates we have not yet had the Navy and Air Force Estimates. That it true. As he knows, they are to be taken later this year, when the matter can be discussed further.
My hon. Friend referred to Pembrey, and said that consideration should be given to using British ranges as much as possible. The matter is under consideration, and everything my hon. Friend has said will be listened to with interest.
My hon. Friend also dealt with certain variations of delivery dates for naval vessels. This is something that arises from time to time, and cannot always be fully explained.
It will be helpful if I cover more fully some of the figures introduced by my hon. Friend which are the subject of the debate he has initiated. I shall take manpower first.
Manpower costs accounted for about 47 per cent. of the defence budget in 1961–62. In 1966–67 the proportion was very nearly the same, about 46 per cent., and we estimate that in 1971–72 it will have risen to about 54 per cent. That last figure is slightly higher than that quoted by my noble Friend the Secretary of State in the defence debate in another place on 24th February, when he said that manpower costs represented about 52 per cent. of the defence budget. The reason is that these two sets of figures have been prepared on slightly different bases. For the purpose of my noble Friend's speech, manpower in the Royal Ordnance Factories was included in the total percentage for equipment, which the R.O.F.'s manufacture. The higher figure of 54 per cent. which I have given includes this R.O.F. manpower. That accounts for the small difference of about 2 per cent.
Four main elements make up the total expenditure on manpower which my hon. Friend has questioned. The first and 994 largest of the four elements is pay and allowances for regular personnel. In each of the three years I have mentioned they account for about half the expenditure on manpower and represent about 22 per cent. of the defence budget in 1961–62; slightly more, nearly 23 per cent., in 1966–67; and up to 27 per cent. in 1971–72.
The second main block of expenditure on manpower is in respect of civilians. This accounted for about 19 per cent. in 1961–62, 18 per cent. in 1966–67, and 21 per cent. in 1971–72.
The two remaining elements of expenditure on manpower are very much smaller. Retired pay, pensions, and so on, accounted for just over 4 per cent. of the defence budget in 1961–62, about the same four years later, and a little over 5 per cent. in 1971–72. These figures exclude the cost of civil superannuation, which was borne on the defence budget in 1961–62, but was transferred to civil Votes in 1962–63. For the purposes of comparison, civil superannuation has been excluded from the 1961–62 figure I have quoted.
Lastly, there is expenditure on reserve pay, which has always been a subject of great interest to my hon. Friend, and this represented just over 1 per cent. of the defence budget in 1961, about the same four years later, and about 0.7 per cent. in 1971–72.
§ Mr. WilkinsonAlthough I accept my hon. Friend's helpful and informative figures, will he agree that two matters are of great importance? The first is that in regard to reserve forces pay there has, as my hon. Friend has said, been a diminution of a third over the period from £21 million in 1964–65 to £14 million in 1970–71, but this pay is a worth-while investment because from it one spreads the catchment area very widely and this has a more than proportionate significance on recruitment. Secondly, there has been a most interesting reduction in pay in the Ministry of Defence, some £22,000 less on this Vote in the reorganisation of Ministerial structure, so that the situation is far more cost effective and helpful.
§ Mr. LambtonMy hon. Friend not only asks the questions but at the same time gives the answers, which makes my job somewhat easier.
995 In the three years I have taken for my examples, expenditure on manpower has varied from just under half to just over half the total of the defence budget.
To deal with equipment, which is the variant of my hon. Friend's theme, expenditure on equipment has accounted for much of the rest. It accounted for 36 per cent. of the defence budget in 1961–62, 39 per cent. five years later, and about 30 per cent. in 1971–72. The balance of expenditure making up the defence budget total has remained fairly constant at about 15 per cent. to 17 per cent. It is accounted for by a number of items, including fuel and works.
My hon. Friend has rightly pointed out —indeed it was his main argument—that pay and allowances in 1971–72 take a higher proportion of the total than they did in the two earlier years I have quoted. This increase is partly attributable to civil personnel costs but mainly to a rise in the cost of military pay as a result of the introduction of the new pay structure last year and this year. This led to a great improvement in the pay of single Servicemen and an all-round improvement for everyone. At the same time, there has also, over the years, been —as my hon. Friend knows, since he served in the Royal Air Force himself and has a close acquaintance with many machines—a very marked increase in the cost of major items of equipment. As a result, as my noble Friend pointed out in the defence debate in another place on 24th February, the defence budget is subject to many pressures from within and without—pressures which by no means recede as the years go on.
As far as external pressures are concerned, it is clearly right that defence should get a fair proportion, and I think one can only hope to get a fair proportion, of the national resources. It has to compete with parallel demands from many other quarters. But within the defence budget itself there are these two conflicting claims between manpower and equipment.
My hon. Friend dealt lightly with training costs. The cost of training is bound to grow as the complexity of the weapons used increases. As he will agree, this is in itself a powerful argument in favour of long-service regular forces which can acquaint themselves 996 with these complexities. The aim must be to make every effort to limit the defence resources devoted to training and, indeed, to other overhead activities to the minimum consistent with the markedly higher standards which we must maintain.
Successive defence White Papers have described the series of measures that have been and are being taken to streamline and rationalise the training organisation of the three services and, therefore, to limit the growth of training costs. As the hon. Member for Newark (Mr. Bishop) will agree, this is not really a matter over which the two parties are in disagreement, because both Front Benches have striven to limit these costs, and I am sure that every Government, from whichever party, will continue to try to do this. But trying to steer the best path between these two major claims on the defence funds is extremely difficult and complex and must involve a choice of priorities. What we have tried to do—as the last Government, with perhaps a different point of view, tried to do—is to find the right balance. In the meantime, it is worth pointing out in this context that the targets after 1972–73 for the defence budget adopted by the Government and announced in the Supplementary Defence White Paper last autumn showed increases on the figure for that year.
Furthermore, these targets are at constant prices and are therefore, as is normal practice, subject to changes in the level of pay and prices arising after the targets were fixed. As I understand it, my hon. Friend's underlying argument is that the choices I have referred to are becoming out of balance and that manpower and equipment in the quantity and quality required cannot really be accommodated within the amount of money which is likely to be available for defence. I hope that I am not putting words into his mouth when I say that his solution would seem to be that, of the two resources, in manpower there should be a "give", as it were, that we should rely more heavily on reservists, whose pay and allowances, being lower than those of regulars, would take a smaller proportion of the defence budget.
§ Mr. WilkinsonI am most grateful to my hon. Friend, who has grasped extremely clearly the whole tenor of my 997 argument. I should not like that argument to be exaggerated and overemphasised, however. What I am saying is that of course there must be a highly professional, highly-trained element with great command potential and a good career structure for long service, but for the rest substantially greater emphasis should be placed on reservists who could be trained at weekends and comprehensively in the evenings, thereby saving prodigious expenditure on the permanent standing forces.
§ Mr. LambtonMy hon. Friend is perfectly consistent in his argument, which he never loses an opportunity to put forward, but it would be only right for me to say that I do not think that is the right solution to our problem.
To be slightly more precise and to go into a little more detail, to answer a question of principle in detail, in the Navy today ships have almost ceased to be ships in the old naval sense of the word and have become floating weapons systems using the most sophisticated electronic and engineering equipment which would have been inconceivable only a few years ago. Proficiency, ability in the operation of this equipment, and, therefore, the whole effectiveness of the Fleet depends upon full-time training and constant practice over a very long period. The extent to which use may be made of reserves in this one example is therefore limited. My hon. Friend will know that there is no reserve fleet as such.
I know that this touches upon a considerable problem, but it would be wrong not to agree that every year the increase in technicality and the increasing need for extra knowledge diminish the case for part-time reservists in many branches of the Service. At the same time, our plans provide for an extensive use of reserves for wartime billets. There are many wartime billets which could not be filled except by reserves, if only because their peacetime counterparts do not exist. To continue my analogy with the Navy, this is the position with the central control of shipping organisation, the manning of the maritime port headquarters and the operation of active service mine-sweepers.
We have also recently reviewed the reserve requirements for the Royal Navy and the Royal Marine in the context both of numbers and availability. As a result 998 of this—I am sure that my hon. Friend will welcome this—we shall be increasing the size of the Royal Marine Reserve by about 400 men and we shall be creating a special branch of the Royal Fleet Reserve, which will be built up over the next few years, to give us the option of the early recall of a substantial number of ex-regular specialist naval ratings and Royal Marines in the first year of their reserve service. We also have other plans to increase the availability of other reserves. These plans are in the development stage.
I am answering my hon. Friend in some detail and not limiting myself to the Royal Air Force, in which he has shown rather specialised interest. In the case of the Army we plan to use reservists to bring B.A.O.R. up to its full mobilisation order of battle, in which process its strength is roughly double. What my hon. Friend had in mind, therefore, would seem to go further than this and to involve a conscious change in our force structure, which would in turn call in question the considerations which underline the balance between regular and reserve forces in our forward planning.
Fundamentally these considerations are strategic. As the House knows, the Government, and, I think, the Opposition, fully support the current N.A.T.O. strategy of deterrence, the modern concept of which came into being, one might say, under the late Government in 1967, with the policy of flexible response which was an initiation of acceptance of the new state of affairs. This involves the need for ready forces to be deployed in peacetime as a visible sign of our ability to use them in the event of war. It would not be an exaggeration to say that our N.A.T.O. allies would not like us to reduce the number of regular units available by day and night and, instead, increase the number of reserve units, which in peacetime would be based in the United Kingdom and would thus, apart from anything else, add to the logistic task that already exists should it be necessary, in a period of tension, to transfer to the Continent the reservists now required to bring B.A.O.R. up to war establishment.
I go further and argue that a further reason for relying on regular forces is again the need for a high professsional standard in handling the modern equipment which is now really the everyday 999 working equipment of so many of our forces.
§ Mr. WilkinsonI do not know whether my hon. Friend realises how very welcome is his statement about naval and Royal Marine reserves, because they play a most significant part in our naval capability. Before he moves on to the broad strategic picture and conclusion, may I ask whether he would re-examine the rôle of our coastal forces? Since the "Eilat" incident, the great potential of missile boats, and the like, has been emphasised, especially in narrow seas, such as those that surround our island. This rôle could be well suited to the reserves, as is already emphasised in their mine sweeping task.
§ Mr. LambtonMy hon. Friend need have no fear. These matters are perpetually under consideration. I can only go back again to saying that the implications of calling out reservists will always make them less immediately available than regular troops. Nor can I imagine that the quantity which we have today compensates for the lack of know-how. As I have mentioned, the difficulty about reservists is that an increase of quantity would greatly aggravate the problems of moving reserve forces from the United Kingdom to the Continent. However, if reservists are to be effective —I do not think that anyone would suggest that we had reservists who were not effectively armed they need equipment. On the question of equipment we come right up against the problem of expenditure, because properly to equip reservists we would in all probability have to provide them with weapons of very great cost in the knowledge of which they might not have the time to perfect themselves.
Against the background of these general considerations the Government have, within a given defence total, tried to achieve a balance between the regular and the reserve forces. The Government have decided on a slight shift in 1000 emphasis, and the T.A. and V.R. will shortly begin to be expanded by about 10,000, a decision which my hon. Friend has said that he welcomes. This is only a slight change in emphasis when viewed against the whole sum of defence expenditure.
I have tried to give my hon. Friend some concrete examples and also drawn the picture as the Government see it.
To sum up, I recognise the problem of increasing costs which was the foundation of my hon. Friend's speech. I hope that what I have said has conveyed two things to him. The first is that there are genuinely very powerful arguments, which apply equally to all three Services, against the solution of the problem of costs which he himself put forward so plainly and clearly. These arguments stem from questions of the availability of extra manpower, the great difficulty in achieving and maintaining other than in regular forces the high standard of skill now required, and the implications for the combat-readiness of front line forces.
In saying this, I do not mean in any way to criticise my hon. Friend's enthusiasm, nor the very high quality of the reserve forces which we have at our disposal. However, these arguments seem to amount to a very convincing case in present circumstances against the very massive switch between regular and reserve forces which a following of my hon. Friend's suggestion would initiate.
I hope that what I have said also has shown my hon. Friend that we are fully alive to the need to get the greatest possible benefit from the correct balance between the regular and the reserve components of our forces. This is the main question. We put forward one point of view. My hon. Friend's is a variant of it. We respect my hon. Friend's opinion, although perhaps not agreeing with it. We have announced decisions and are doing further work designed to improve the balance. I assure the House that this will continue to be our aim.