§ 1.46 a.m.
§ Dr. David Owen (Plymouth, Sutton)
The present defence policy of the Government is a direct contradiction of 739 practically everything that Ministers said when they were in opposition and, indeed, on frequent occasions is a contradiction of what Ministers said in the earlier part of this Government's tenure of office.
The present defence stance of the Government is a staggering indictment of the whole philosophy of the Tory Party over the last 50 to 100 years and of successive Tory statements on defence. The facts are that the defence expenditure cuts that have been announced for this coming year will involve the largest reduction that has ever been made in expenditure for a succeeding year.
In May of last year, a cut of £60 million was announced for the year starting April 1974. In October of last year, a further consequential reduction of £12 million was announced to operate in 1974. In December, the staggering reduction of £178 million was announced, making a grand total of exactly £250 million—not a phased reduction over two or three years, but a savage reduction to take effect in the year immediately following.
This decision on defence expenditure reflects the dire overall state of the nation's economy. Regardless of the coalminers working a five-day week, and irrespective of the oil crisis, we now know from the Governor of the Bank of England that this country, after more than three years of profligacy and mismanagement is running a deficit on the balance of payments of £2,500 million a year. It is no wonder that the governor warns of some years of relative austerity stretching ahead.
I, personally, do not dispute the need for these defence cuts, and I have always believed that the defence budget should be kept under constant scrutiny. What I dispute is the way this country has been run and the way the economy has been allowed to drift downwards so that this sorry state of affairs has had to be announced as an emergency programme, without any warning, and not as part of a phased steady reduction in the defence budget.
Never again will the Tory Party be able to represent itself, as it has done ceaselessly, as the sole protector and safe-guarder of the Services. Never again will the Tory Party be able to claim to be the 740 sole patriotic party. Never again will this House—and, hopefully, the country—have to listen to the mixture of bombast and hypocrisy that has constantly come from the benches opposite when defence matters are discussed. These cuts represent yet another of the Government's now famous U-turns.
I do not need to remind Ministers of the pledges they made on defence expenditure when in opposition, whether it was to keep a sizeable presence in the Far East—£100 million a year was one of the figures mentioned—a firm commitment to remain in the Persian Gulf, the commitment to build a fifth nuclear submarine or the commitment to increase the build rate of hunter-killer submarines. The list is never-ending. Yet all those promises lie now in the waste paper basket of electoral pledges to take their place along with the most famous electoral pledge of all: to cut prices "at a stroke".
What must not be forgotten, however, is that the implementation of these cuts, and particularly the latest of £178 million, can have a savage effect on the Services, on the Service men who work in them and—because I am particularly concerned in this debate with the Royal Navy—on the major industries, particularly the Royal dockyards, that serve the Navy.
It is simply not good enough that the Minister yesterday was unable to give the House any information or details about these cuts. We are told that a number of Royal dockyard projects will necessarily be curtailed or depressed and that Ministers are either unable or unwilling to give any details. I hope that the Minister tonight will at least be able to give some details. No details have been given, or apparently can be given, of the effect of these expenditure cuts on the major cities that serve and are often very dependent on the Services or—because I am obviously concerned about the city of Plymouth—of the intimate effects on the Royal dockyards or on employment. We know nothing about what will happen to Service men's pay or to dockyard workers' pay. This lack of information is not tolerable.
It might have been reasonable to wait for the Defence White Paper, but we are told by constant Government leaks that 741 they intend to pitch the country into a cynically contrived General Election. I hope that this is not so, but it would certainly put my mind at rest if the Minister tonight would tell us that these announcements will be made in the Defence White Paper which will be published before the country is facing a General Election. It may well be that, even now, Ministers will hold back from what would in my view be a totally irresponsible election. If, however, they go to the country, the country, and especially the constituencies which will be deeply affected by these expenditure cuts, have the right to know what impact and effect they will have.
I should like to know from the Minister whether the savage cut-back is to be in the dockyard modernisation programme, so essential for the effective working of the dockyards and so vital for achieving the improvements in productivity which most of us want to see. Are the cuts to be a series of postponements, rephasings or carrying forward of expenditure which we have seen occurring in the defence budget for the last two years—the same mix as we have had before, fudging through and avoiding serious strategic cuts, while at the same time there is lavish runaway expenditure on items such as the cruiser programme, now running at close to £100 million a cruiser, and we have even been told that that may be rephased?
Are we once again to see a reduction in the hunter-killer submarine programme, which would have a profound effect on the dockyards refitting the submarines, Plymouth and Chatham? There are already once again signs that expenditure on the surface Navy, a version of the Navy of a century ago, will reduce expenditure on the Navy of the future, the underwater Navy. Before it is plunged into an election, the country has the right to know the answers to such questions.
During the period of the present Government we have experienced unparalleled industrial unrest in the Government establishments in the Royal dockyards. What has been interesting has been that that unrest has been at all levels—management, non-industrial civil servants and others. In January of last year they passed a resolution recording their deep sense of outrage at the 742 Government in their rôle of employer for breaking their pay agreement with their own employees.
Earlier in the life of the present Government there was a major strike in the Royal dockyards, and the Government's allegation that the dockyard workers were then acting unreasonably was comparable with the present situation. When eventually the matter went to arbitration, a substantial increase was awarded and the men's initial claim was largely upheld. Since the Government came to office, we have not had a single new piece of naval construction carried out in the dockyards, and that is a long way from their pledges before taking office.
For many years I have believed that it was time that the country's defence policy was conducted on a more bipartisan basis. However, in opposition hon. Members opposite have never missed an opportunity to try to make party capital out of defence policies. I remember that at the last election the present Secretary of State for the Environment, then defence spokesman, made a speech at Plymouth when he gave a number of pledges, none of which has been fulfilled.
All too frequently—and the Minister himself has fallen into this trap)—they have made speeches—and I think that it was the Minister himself who came to the West Country to speak about the Labour Party's defence programme—quoting from the Blackpool Conference. I hope that the Minister will not do that again, because there is now a defence policy from which he may quote rather more accurately and on which the Labour Party will fight the next election. It is remarkably similar to the policy being pursued by the present Government. We say:While maintaining our support for NATO as an instrument for détente no less than defence we shall, in consultation with our allies, progressively reduce the burden of Britain's defence spending to bring our costs into line with those carried by our main European allies. Such a realignment would, at present levels of defence spending, mean savings on defence expenditure by Britain of several hundred million pounds per annum over a period".The present Government have reduced defence expenditure by £250 million in just one year.
743 For further confirmation of the trend one has only to look at the RUSI memorandum "Budgeting for Defence", published in 1972, when the writer said:The reshaping of the UK defence that was settled between 1964 and 1969 has undergone no significant change in the last three years. A pattern of defence priorities was established towards the end of Labour's period of office which has been preserved by their successors. Moreover, the scale of the defence effort, and hence the position of defence in the scale of national priorities, also appears to have become settled.All that has happened since then is that defence has received far less of a share of the overall national budget. I do not dissent from those priorities. But if, as I fear, this country is to be plunged into a General Election, I hope that we shall have no more bombast from the Under-Secretary or from his Secretary of State, or from any Ministers who purport to speak on defence matters, and that they will recognise that the defence policies which they have pursued, particularly over the last year or so, mean that there is precious little difference between the two parties and that they serve the Services ill by pretending otherwise.
However, there is a more serious responsibility upon them. If the Government are to plunge this country into a General Election, the overall effect of that £250 million reduction in one year will have a serious impact on the Services and the people who are deeply implicated in the defence budget. The Government have a duty to the country to reveal far more information on how those reductions are to be made than has yet been given, and certainly far more than has been made available.
§ 2.1 a.m.
§ The Under-Secretary of State for Defence for the Royal Navy (Mr. Antony Buck)
It is always an interesting experience to listen to the hon. Member for Plymouth, Sutton (Dr. David Owen), a predecessor of mine at the Ministry of Defence. But tonight it seems that we have had an extraordinary degree of muddled thinking in the thesis which he has put before the House.
The hon. Gentleman castigated us for our policy and then said that it was apparently his intention and that of his party to adopt a similar policy. He castigated me for indulging in bombast, 744 but the only example that he could give was the fact that in the West Country I had quoted from the findings of the Labour Party at its conference, which I imagine the hon. Gentleman knows rather better than I do.
The Labour Party gave a fair degree of support for a £1,000 million cut in defence expenditure. That is my understanding of what happened at the Labour Party Conference. It hardly seems appropriate that I should be castigated for quoting from the Labour Party Conference. I hope that I did it accurately. If I did not, I apologise. All that I did was to quote from the debate on defence at the Labour Party Conference. I find it surprising for the hon. Gentleman to accuse me of bombast for so doing, and from him, as he usually gives serious thought to these matters, it is extremely disappointing.
I was particularly surprised to hear the hon. Gentleman castigate the present Government for what happened in relation to the Far East and in the Persian Gulf. In opposition we had wished to reverse the policy relative to the Persian Gulf. As a back bencher I paid visits to that area. But the General Election which turned out the Labour administration came too late for us to make it possible to reverse the policies pursued by the Labour Government. It is surprising that the hon. Gentleman should castigate us on that matter.
In view of the success which the ANZUK force has had, it is disappointing to most of us now that we shall be unable to continue the commitment there in the same way and with the same degree of co-operation. But we lived up to our pledges on that matter.
It is disappointing to find the hon. Gentleman indulging in electioneering before we know whether there will be a General Election soon.
The final absurdity is for the hon. Gentleman to castigate us generally for our defence policy and then to say that it is almost precisely the same as that which he would adopt.
§ Dr. Owen
The hon. Gentleman has used the word "castigate". I am not castigating him for his defence policy but for advocating at the last General Election a defence policy which has not been 745 pursued and for the Government pretending over the last three years that they are pursuing a policy which they have not pursued. That is the difference—the eventual policy, and particularly the defence cuts announced in one year.
§ Mr. Buck
We were criticised on defence matters last year because we raised the proportion of the gross national product which we devoted to defence. Now we are being criticised by the hon. Member for cuts. Perhaps I may now get on to the serious part, having heard the hon. Member indulging in his defensive electioneering.
Of course, as Minister for the Royal Navy, I share some of the anxiety which he has expressed, but I should like to assure him that I and my colleagues in the Department will do our utmost to ensure that adverse effects on the Services are kept to a minimum. I note what the hon. Member said about that. He said that in the past when there were cuts we had "fudged" them. He said that rephasing had avoided serious cuts. That seems to me an intellectual gymnasticism by the hon. Member. I found his speech, if I may say so without bombast, uncharacteristically lacking in logic.
In the current economic and industrial circumstances, the Government had no alternative but to reduce the level of public expenditure in the way announced by the Chancellor, and it was clearly right that all major spending programmes, including defence, should take their share of the cuts.
As the House will know, we have been asked to reduce our expenditure during 1974–75 by a total of £178 million, at 1973 survey prices. This reduction will be made up of a cut of 20 per cent.—£16 million—on the planned capital expenditure element—excluding married quarters—of the Department of the Environment's defence works Vote ; and a cut of £162 million on defence expenditure on goods and services—less wages and salaries—that is, a cut of about 10 per cent. in expenditure on, broadly, the equipment and stores programmes.
The greater part of the contribution from the naval programme to the overall defence budget reductions will be found by rephasing the new ship construction and weapons procurement programmes. In addition there will be some rephasing 746 of the stores and naval aircraft programmes.
The energy cuts and the shorter working week and shortages of steel and other materials are bound to have an effect upon ship construction capacity, and upon the progress of ships at the builders. I fear, too, that some delays must be expected in deliveries from the heavy engineering and electronics industries, which supply us with much of the equipment which goes into our warships and shore establishments. Progress on a number of naval weapons and associated projects is also being held back.
The longer the restrictions continue, the greater the delays will obviously be. Even so, there will inevitably be some slippage, and this will increase if the three-day working week and shortages of materials and components persist for any length of time.
Thus a direct result of the three-day week and the general shortages of materials will be a degree of rephasing of the naval equipment programme. At this stage it is too early to judge its precise effects, or how much of the financial savings required in 1974–75 will accrue in this way.
§ Dr. Owen
Surely the Minister is not saying that savings made between now and April which will take part of the 1973–74 budget will be carried forward into 1974–75? How does he account for the £60 million defence expenditure for 1974–75 which was announced in May last year in addition to the £178 million expenditure?
§ Mr. Buck
That has largely been dealt with by the rephasing of which the hon. Member spoke. At 2.10 a.m. it is a little late to start playing the numbers game. Perhaps he will hear me through. If instead of electioneering the hon. Member wants a detailed analysis of the figures I shall be glad to do what I can to provide that, although we are very much in the early stages. These defence matters were dealt with in the House only very recently.
In view of the present uncertainty it would clearly be inappropriate to start now to take deliberate action to reduce the programme by cancelling or deferring specific major projects. But the position is under constant review and if it becomes 747 clear that slippage of the naval programme is not reducing demand to the required degree, further measures will be necessary. In that case, consideration would have to be given to deferring planned orders for new ships and the phasing of the purchase of weapons and equipment.
But, as I have said, it is too early to say to what extent deferments of this sort might be required and which particular projects might in the event be affected. We shall do our best to minimise the effects. In particular, we attach the highest importance to our contribution to NATO's land, sea and air forces. In arriving at decisions on the detailed application of the reductions in planned expenditure we shall give top priority to continuing to meet those commitments. If the need arose to make any adjustments we should of course consult fully our allies in NATO.
To sum up the effect on the naval equipment programme, there is no need at this stage for the cancellation or deliberate deferment of any projects, but we shall be watching closely to see how the situation develops.
In considering what deliberate measures we may have to take, we must bear in mind not only the importance of preserving operational efficiency but also the need to sustain the industrial base on which our equipment procurement programme so largely depends. The House will recall that in the Defence White Paper of 1972 we announced the establishment of the Procurement Executive. One of the most important tasks of this organisation is to strengthen relations with defence suppliers and to maintain the continuity of work and the expertise in both development and production which are vital to the structure of the defence industry. At the same time, we are very conscious of the desirability of maintaining the levels of employment, especially in the development areas, which have been built up in consequence of the materiel procurement programme of the three Services.
As for shipbuilding, the House will recall that on 23 rd July both my right hon. and noble Friend the now Secretary of State for Energy, then Secretary of State for Defence, and my right hon. 748 Friend the Minister for Industrial Development announced in Parliament the Government's intentions on future warship ordering policy. The main feature of this was the increasing concentration of warship orders on three firms, Messrs. Vickers, Yarrow and Vosper-Thorneycroft, all of which have, over the years built up the highly specialised design, planning and quality control capacity, which is so vital for the building of a modern warship. It is most important that the economies that are the subject of this debate should not erode the capacity and confidence of those firms on whom, in the long term, we shall depend, or of those other firms on which we are currently relying to complete warship orders. I need not remind the House that the majority of the warship building firms are situated in the development areas, where there is a special need to maintain employment.
What I have said about the need to maintain continuity of production in the shipbuilding industry applies equally to the heavy engineering and electronics industries, where we, and the Army and the RAF, which also have a vital interest, have established excellent relationships with our main suppliers.
In line with the general policy I have just described, no action is at present contemplated to reduce the ship refitting and repair programmes of the Royal dockyards. As is well known, however, the difficulties they have been having in recruiting and retaining labour make achievement of these programmes somewhat problematical. Efforts to recruit so as at least to maintain the present level will continue. Progress with the work will be carefully monitored and adjustments made to programmes as necessary, with high priority being given to keeping ships operational.
These monitoring arrangements will also cover slippages which may arise from the energy crisis and from shortages of materials. Although the Royal dockyards are exempt from the restrictions on the consumption of electricity and are therefore working normal hours, every effort is being made by general managers to restrict consumption to 65 per cent. of the normal by such measures as removing a proportion of lights, concentrating office workers in fewer rooms and by appeals to the employees, supplemented by regular supervision. 749 The dockyards are not, however, exempt from the growing shortages of materials which are bound to impose reductions in the amount of work which can be done. These were already being felt before the energy crisis because of the world shortage of certain raw materials. The energy crisis will add to this by reducing for a time the supply of finished products. Steps have been taken by my Department to ensure that scarce materials are directed to the jobs having the highest priority. Expenditure on plant and machinery is likely to be curtailed by delays in delivery.
The improvements in dockyard facilities, which have been in hand for some years, will be affected by the cuts in the naval works programme due to the moratorium on works expenditure generally announced by the Government in October 1973 and to the cuts in defence expenditure which are the subject of the debate.
But it is impossible to state now the precise effect of the cuts on the programmes for the dockyards or for the rest of the naval works programme. The moratorium was designed to roll back contracts for three months, with certain exceptions for accommodation and urgent operational requirements. The delaying effect of this will continue into 1974–75. We are now working out how the cuts announced in December can best be met.
In broad terms the reply to the hon. Gentleman's question is that we must accept a degree of slackening in the pace of improvements. We are not envisaging a lesser Navy, but circumstances for the moment will inevitably necessitate a "less better" Navy. Given the circumstances which I have adumbrated, I hope that the hon. Gentleman will recognise that that is a sound policy, although some of his right hon. and hon. Friends may not. We must be grateful that he personally does not seem to have fallen into the snare which entangles certain Opposition hon. Members, and further parts of the hon. Gentleman's party, who would appear to wish to slash and cut defence expenditure right through the bone and into the marrow. He is not one of them, but he knows that that is the view of some of his hon. Friends. They wish to see the cuts go right through to the marrow and to see the marrow drain away. 750 It would appear from some of the speeches which I quoted when speaking in the West Country, which were made at the Labour Party Conference, that that is the view of some. The damage which such recklessness would wreak, amounting perhaps to a thousand million pounds, would do considerable harm to our security, and its effect on NATO would not exactly be desirable. It seems that we have the Labour Party going away from those firm commitments in its hastily drafted campaign document, which says that a Labour administration would,Progressively reduce in consultation with our Allies the burden of Britain's defence spending… while maintaining our support for NATO…".Those are the words which the hon. Gentleman quoted. Such reductions in defence expenditure seem, from the background of the Labour Party Conference, to have been designed on a mammoth scale. If the hon. Gentleman, with the authority of the Opposition Front Bench, were to deny that, I should be interested to hear him say so. Apparently such cuts seem likely to be on a mammoth scale. The Labour Party would hardly be able to sustain that and then to suggest that support of NATO is a paramount consideration. Do hon. Members opposite think that a shoe-string NATO could be an effective instrument of détente no less than of defence? Do they think that the Warsaw Pact will take its cue from an enfeebled NATO, and meekly phase itself out? Do they think that British industry will be able to sustain employment on an equipment programme at the level of expenditure they propose for defence?
The Labour Party must recognise that such a course of action of mammoth cuts, as stated at its party conference, would cause consternation in NATO.
The Government have held steadily to the broad strategy of their defence policy since 1970. We believe that the relative stability we have achieved has been important in developing the confidence both of our own people, in the Services and outside, and of our allies, in our determination to maintain our nation's security. Some, at any rate, of the Opposition may wish for fundamental changes, but we do not, and we shall ensure that the current proposed cuts in expenditure will be applied in such a way that our defences remain truly effective.