HC Deb 17 June 1982 vol 25 cc1073-4
5. Mr. Ron Brown (Leith)

asked the Chancellor if he is yet in a position to announce whether supplementary provision will need to be made to meet the cost of the Falkland Islands operations.

6. Dr. Edmund Marshall

asked the Chancellor of the Exchequer if he will make a statement on the national financial means by which he proposes to finance any additional public expenditure resulting from the Falkland Islands expedition.

The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne)

It is not yet possible to say what the costs of the Falklands operation will be and therefore to what extent supplementary provision may be necessary. The costs will be met in ways consistent wth the Government's economic strategy.

Mr. Brown

Is it not clear that this £1 billion adventure will have to be paid for sooner or later? Will it, as usual, be the working people of the country who will pay for it, or will the Government surcharge those companies who were selling arms to both sides? I pointed out what those companies were doing. If there is any morality in this country, a surcharge should be applied.

Mr. Bruce-Gardyne

As my right hon. and learned Friend the Chief Secretary has made clear, it is the intention and the determination of the Government that the Falkland Islands campaign will be met in ways that are wholly consistent with the overall economic counter-inflation policies of the Government.

Dr. Marshall

Does the hon. Gentleman accept that many of us refuse to believe that the Government have not yet got the best estimate of the full cost to United Kingdom funds of the operation in the Falklands? If the Contingency Reserve, which is a reserve almost entirely used up each year, is to be used to finance part of this operation, how will other contingencies be met?

Mr. Bruce-Gardyne

The hon. Gentleman's recollections of last year are not entirely correct. The Contingency Fund was only half used last year. We are at an early stage of the current financial year. The Contingency Reserve is available to meet unexpected charges that occur during the year. That does not mean that that is necessarily or exclusively the answer to the question of the cost of the Falklands' campaign. Contrary to what the hon. Gentleman appears to believe, it is not possible to give the House any estimate of the cost at the moment.

Sir Anthony Royle

As Argentine aggression caused this heavy expenditure, is it the Government's intention to claim reparations from Argentina?

Mr. Bruce-Gardyne

That question should be addressed to my right hon. Friend the Foreign Secretary.

Mr. Shore

I am sure that the House was surprised that of all the Treasury team, the Economic Secretary was left to answer this question. However, as he has replied, I am also surprised that he was not able to give a more forthcoming reply to my hon. Friend the Member for Goolw (Dr. Marshall) at this stage of development.

When considering any of the measures that may be taken to deal with the additional costs brought about by the Falklands operation, will the hon. Gentleman first satisfy himself that there is evidence of overheating of demand in our shipyards and dockyards and in the British aerospace industry? If there is no evidence of overheating of demand, will he make certain that he does not decrease demand in the rest of the economy to meet the undoubted extra cost of repairing the inevitable losses caused by the recent campaign?

Mr. Bruce-Gardyne

The right hon. Gentleman has a slightly exaggerated notion of any conceivable cost arising from the campaign and the impact that it may have on the general issue of management of the economy. I assure the right hon. Gentleman, as I have already assured his hon. Friend, that the campaign and what follows from it will be financed in a manner that is wholly consistent with the general economic and counter-inflation policies of the Government.

Mr. Hoyle

What does that mean?

Mr. Nicholas Winterton

Does my hon. Friend agree that it is wrong to measure the defence of freedom and the maintenance of international law in purely monetary terms? Does he agree that immense long-term benefits will accrue to this country from the example that we have set in the South Atlantic?

Mr. Bruce-Gardyne

I assure my hon. Friend, if he needs to be assured on this score, that the Government have put no cash ceiling on the costs of this operation. We cannot say at this stage what extra costs are involved. However, the extra costs represent, in any case, only a small proportion of the defence budget of £14,000 million. Therefore, there is no immediate cash problem. I am sure that the general proposition put by my hon. Friend is one that will command acceptance throughout the House.

Forward to