Expenditure

HC Deb 24 January 1978 vol 942 cc1155-60

2. Miss Maynard

asked the Secretary of State for Defence what steps he proposes to take to reduce the proportion of Great Britain's resources devoted to arms to the proportion of the other European NATO Governments.

5. Mr. James Lamond

asked the Secretary of State for Defence how the proposal to increase arms spending annually by 3 per cent. for five years relates to the Government's promise to reduce the proportion of the gross national product devoted to arms to the proportion of the other European NATO Governments.

6. Mr. Robert Hughes

asked the Secretary of State for Defence what steps he proposes to take to reduce the proportion of Great Britain's resources devoted to arms expenditure to the level of the other European NATO Governments.

7. Mr. Frank Allaun

asked the Secretary of State for Defence how the proposal to increase arms spending annually by 3 per cent. for five years relates to the Government's promise to reduce the proportion of the gross national product devoted to arms to the proportion of the other European NATO Governments.

11. Mr. Hugh Jenkins

asked the Secretary of State for Defence how the proposal to increase arms spending annually by 3 per cent. for five years relates to the Government's promise to reduce the proportion of the gross national product devoted to arms to the proportion of the other European NATO Governments.

14. Mr. Norman Atkinson

asked the Secretary of State for Defence how the proposal to increase arms spending annually by 3 per cent. for five years relates to the Government's promise to reduce the proportion of the gross national product devoted to arms to the proportion of the other European NATO Governments.

17. Mr. Litterick

asked the Secretary of State for Defence what is his Department's estimate of the magnitude of United Kingdom defence expenditure as a percentage of gross national product in the financial year 1978–79.

The Secretary of State for Defence (Mr. Frederick Mulley)

The defence budget estimates for 1978–79 which will shortly be presented to the House will represent about 4¾ per cent. of estimated gross domestic product at market prices, compared with the 5 per cent. in last year's Statement on the Defence Estimates for 1977–78.

The Government have decided to increase the defence budget by 3 per cent. in real terms in 1979–80 over the revalued Cmnd. 6721 figure for 1978–79 and by a further 3 per cent. in 1980–81, subject in the latter case to review in the light of our economic circumstances. No decisions have been taken about subsequent years. Defence took its full share of the public expenditure cuts in 1976. Now that our economic prospects are improving, it is right that we should plan to contribute to the increase in NATO defence effort made necessary by the marked and continuing growth of Warsaw Pact military power.

Mr. Jenkins

On a point of order, Mr. Speaker. Is not the grouping of Questions justifiable only if it is not used as a means of not answering some of the Questions? I wish to protest about that.

Mr. Speaker

We shall see how we get along.

Miss Maynard

Is my right hon. Friend really saying that we are encouraging multilateral disarmament by moving in the opposite direction and spending more of our resources on arms?

Mr. Alan Clark

Unlike 1938.

Mr. Mulley

I do not know that one can say that by increasing defence expenditure one assists the tremendous efforts that we and others are making to achieve multilateral decisions, but I am absolutely certain that if we were making unilateral reductions in defence there would be no incentive for others to seek a multilateral agreement.

Several hon. Members

rose—

Mr. Speaker

Order. Although seven Questions are being answered together, I propose to call first those whose Questions are being answered. Mr. James Lamond.

Mr. Lamond

My right hon. Friend is to be congratulated on the reduction to 4.75 per cent. which he has announced today. Does not the increase of 3 per cent. per annum again raise the percentage of our gross national product which we are spending? If that is so, are we not moving in a direction exactly opposite to that which we promised in our manifesto at the last General Election?

Mr. Mulley

No. It should not be thought that 3 per cent. on total defence expenditure in real terms is 3 per cent. on the share of the gross domestic product. Of course, one has to make estimates of the growth of the economy because the percentage of defence expenditure of GDP depends on two factors—on defence expenditure on the one hand and on the economic state of the nation on the other. On the estimates that we have, the increased 3 per cent. will leave the figure roughly at 4¾ per cent.

Mr. Hughes

Does my right hon. Friend accept that, if we were to have exactly cur equal proportion in relation to defence expenditure, it would release £1.8 billion, which could be far better used on the health, education and social services of the nation?

Mr. Mulley

It would not be practicable to reduce the amount by the size that my hon. Friend suggests. It is worth pointing out that over the last five years defence expenditure in real terms has fallen by 4 per cent. while civil programmes have increased by 6½ per cent.

Mr. Allaun

Instead of showing utter contempt for the British people and the Labour movement by flouting the election pledge to reduce arms spending and actually increasing it, will the Secretary of State tell Dr. Luns, the ever-demanding and propagandising head of NATO, to get stuffed?

Mr. Mulley

With respect, I do not think that my hon. Friend would really wish a message of that sort to be conveyed.

Mr. Jenkins

Will my right hon. Friend now answer my Question, which is No. 11? Is he aware that in not carrying out the party's election pledge he is driving a wedge between the party and the Government and that some of us on this side will not feel able to support the Government in this course?

Mr. Mulley

The fact is that substantial reductions in defence have been made, as I have indicated. Some quarters have argued that too great a reduction has been made. My hon. Friend will know that from the long-term defence expenditure plans which we inherited very substantial reductions have been made. We have already moved from the position of around 5¼ per cent. of GDP to 4¾ per cent., and, as I have indicated, the other side of the equation was that in 1974 we perhaps did not anticipate the extent of the economic crisis that we inherited or the length and depth of the world recession which has been a continuing problem since then.

Mr. Litterick

Does my right hon. Friend recollect that both the Foreign Secretary and the Prime Minister have said publicly that the Government intend to play a positive rôle coming United Nations deliberations on disarmament? Does he not realise that few people in the country will accept either the logic or the morality of piling armaments on armaments prior to such a conference in a world which is already over-armed?

Mr. Mulley

I confirm that it is our intention to play a positive rôle in the United Nations defence and disarmament discussions, but I think that my hon. Friend is exaggerating when he talks about piling armaments on armaments. In fact, in real terms the defence budget that I shall be presenting later this year is the lowest to be presented by this Government.

Mr. Viggers

Why is the Secretary of State so deferential to his hon. Friends? Will he not tell them that it is his duty to match our defence expenditure not with the expenditure of our allies but rather with the expenditure of our potential enemies?

Mr. Mulley

I do not entirely accept what the hon. Gentleman has said. In an alliance, it is only right that all allies should play a proportionate part depending on their economic circumstances. I do not accept that it is necessary that we should bear a disproportionately large share.

Mr. Hooson

Will the Secretary of State explain to some of his hon. Friends below the Gangway that if the Soviet Union, for example, were to reduce its huge nuclear submarine fleet—which seems to have no defensive rôle whatever—there would be a chance of the NATO countries taking the very desirable step of reducing their own defence expenditure?

Mr. Mulley

No one would be more happy than I to be able to reduce defence expenditure as a result of a multilateral agreement which would lead to a reduction by the Warsaw Pact as well as by NATO and, indeed, in all parts of the world.

Mr. MacFarquhar

To what extent does the 4¾ per cent. for 1979–80 compare with the known plans of our principal European allies, and to what extent does our decision to increase expenditure by 3 per cent. a year relate to a similar decision announced by the American Secretary for Defence?

Mr. Mulley

As we announced our decision before the announcement by President Carter yesterday, obviously they cannot be directly related. But, as I have explained, the House will be familiar with the communiqué which the Defence Ministers made that all countries during 1979 should aim to increase their contributions by about 3 per cent. in real terms.

Colonel Sir Harwood Harrison

[...] making his forecast for next year, has the Secretary of State allowed for the wages review for all our Services? He should tell that to his hon. Friends.

Mr. Allaun

We agree with that.

Colonel Sir H. Harrison

But hon. Members opposite are not saying it at the moment. The right hon. Gentleman might say to his hon. Friends that there is a big pay review to come and that he must allow for it.

Mr. Mulley

As I think the hon. and gallant Gentleman knows, the practice of the House under successive Governments, not only in defence but in all aspects of public expenditure, is to allow for pay and price increases additional to the Estimates. The comparative figures that I have given are, in real terms, trying to take full account of pay and inflation increases. It is absolutely in no sense due to defence economy that restrictions have had to be placed in previous years on pay increases for the Forces. They have come directly from pay policy decisions.

Mr. Ron Thomas

Is it not the case that the balance of payments costs of our defence expenditure over the past couple of years have been almost equal to the amount loaned to us by the IMF which we had to crawl on our bellies to get and to make drastic cuts in public expenditure in order to achieve? What was the balance of payments cost of our defence expenditure in 1977?

Mr. Mulley

I cannot give a precise figure without notice. But it is not the case that our overseas defence expenditure was equal to the loan made available to us by the IMF.

Sir Ian Gilmour

Will not the Secretary of State explain to his anti-Western hon. Friends that the Russians are spending at least 13 per cent. of their gross national product on defence? Is it the case that what he said this afternoon, which is welcomed, entails the formal burial of at least the defence aspects of Labour's absurd programme for 1976?

Mr. Mulley

I do not think it appropriate to go into all these matters this afternoon. As the right hon. Gentleman knows, the election manifesto, whenever that election may come, will be published after due deliberation at that time.